The first income tax in Illinois, a flat tax, was established 1969. A flat tax applies a common percentage (currently 4.95%) to personal income to calculate income tax owed. As of 2019, 43 states levied a tax on personal income. Of the 43 states that levy income taxes, 11 had a flat income tax rate. The remaining 32 states had graduated tax structures, with various numbers of brackets and ranges.

The flat tax method taxes all individuals at the same rate without regard to level of personal income. In other words, a person who has taxable personal income of $30 million dollars a year pays the same 4.95% tax rate as a person who has taxable personal income of thirty thousand dollars a year. For that reason, this initiative is informally called the “Fair Tax” proposal. The intended purpose of a graduated tax rate is to more fairly assess personal income taxes based on income. 

The “Illinois Allow for Graduated Income Tax Amendment”, a legislatively referred constitutional amendment is in front of the voters on November 3, 2020. Legislatively referred means the General Assembly voted affirmatively to place the question on the ballot. The proposed amendment to the state constitution relates to income taxation. A yes vote on the ballot measure would repeal the state’s constitutional requirement for a flat tax rate. A no vote would retain the flat tax rate structure. The vote requirement for constitutional amendments is either (a) 60 percent of votes cast on the ballot measure itself or (b) a simple majority of all of those voting in the election.

If the amendment is approved by the voters, SB 687 (signed by Governor Pritzker in June 2019) would then be enacted to establish brackets for a graduated income tax. SB 687 allows for six graduated rates beginning on January 1, 2021.

Illinois SB 687 (2019) income tax rates*

IncomeRateIncome Rate
1Up to $10,0004.75% marginal rateUp to $10,0004.75% marginal rate
2$10,001—$100,0004.90% marginal rate$10,001—$100,0004.90% marginal rate
3$100,001—$250,0004.95% marginal rate$100,001—$250,0004.95% marginal rate
4$250,001—$350,0007.75% marginal rate$250,001—$350,0007.75% marginal rate
5$350,001—$750,0007.85% marginal rate$350,001—$750,0007.85% marginal rate
6Annual income of $750,001 or above7.99% on net income instead of marginal ratesAnnual income of $1,000,000 or above7.99% on net income instead of marginal rates
*Note that in the proposed Brackets 1 and 2, single and joint filers would see a rate cut from 4.95% to 4.75% or 4.90%. In Bracket 3, single and joint filers with income up to $250,000 would pay the current 4.95%. Approximately 97% of Illinois residents would see a tax decrease and 3% of Illinois residents would incur a higher income tax rate.

Significant amounts of money have been raised to either support or defeat this amendment. In favor of the proposal are 2 political action committees (PACs), Vote Yes For Fairness and Vote Yes for Fair Tax. In opposition are two PACs, Vote No on Blank Check Amendment Committee and Coalition To Stop The Proposed Tax Hike Amendment.

The arguments for or against the amendment are many and complicated. Obfuscation of  facts, utilization of trigger words or projections of problematic outcomes have been strategies deployed during the run up to the election.

Supporters say the changes will allow the state to more fairly tax personal income and help close a hole in the state’s budget. Proponents and the governor’s office project, if not approved, that the state will have to cut funding to education, police and other services by up to 15 percent or hike taxes on everyone to around 5.95 percent. This projection by the governor’s office was made prior to the Coronavirus pandemic which has added to the state’s stressed financial condition.

According to Ballotpedia, the amendment has been endorsed by prominent labor groups such as the Illinois AFL-CIO, SEIU Illinois State Council, Associated Fire Fighters of Illinois and Chicago Teachers Union, as well as the AARP, League of Women Voters of Illinois, Planned Parenthood Illinois Action, Sierra Club Illinois and the Chicago Jobs Council.

Opponents also project possible outcomes. They posit that increased tax hikes will hurt businesses at a time many are already suffering, making the state less competitive with neighbors like Indiana, Iowa, Kentucky, and Missouri, which have all cut state income taxes in recent years. Additionally, opponents say the the General Assembly should not be trusted not to squander the money or raise rates again once lawmakers have the power to do so.

Prominent opponents of the amendment include hedge fund manager Kenneth Griffin, listed by Forbes as Illinois’ richest person, former Illinois Manufacturers Association President Greg Baise, the Illinois Farm Bureau and Illinois Chamber of Commerce.

Please use this article as a starting place to educate yourself on this important ballot initiative. Base your decision on available facts and data. If you search for information online, verify the bias of the source you use. Information on media bias is available at non-partisan www.allsides. There are other media bias sites as well. Don’t be influenced by a slick print handout or a yard sign that reflects only one side of the issue…do the work and then make your decision to vote yes or no.

Karl Bronn is a Freeport resident