Last updated at 8:09 a.m.
ILLINOIS — Illinois voters appear to be sending the so-called Illinois "fair tax" constitutional amendment to defeat. The ballot measure would have repealed the state's constitutional requirement that the state income tax is a flat tax across income levels and implemented a graduated tax instead.
Wednesday morning, with 98 percent of the vote in, "no" votes were leading with 55 percent of the vote compared with 45 percent of "yes" votes.
Opponents of the amendment declared victory, with Illinois Republican Party Chairman Tim Schneider touting the defeat of the measure. "Tonight, Illinois voters rejected Springfield politician’s tax hike gambit," he said.
The Gov. J.B. Pritzker-backed Vote Yes For Fairness Committee issued a statement Wednesday acknowledging defeat.
"We are undoubtedly disappointed with this result but are proud of the millions of Illinoisans who cast their ballots in support of tax fairness in this election," the committee said. "Illinois is in a massive budget crisis due to years of a tax system that has protected millionaires and billionaires at the expense of our working families, a crisis that was only made worse by the coronavirus pandemic. ... Now lawmakers must address a multibillion-dollar budget gap without the ability to ask the wealthy to pay their fair share."
Illinois Chamber of Commerce CEO Todd Maisch also issued a statement.
“It is clear that Illinoisans do not trust this Legislature and this administration to spend more of their precious tax dollars without restraint," Maisch said. "We believe we’re on our way to hearing from the electorate that Illinois needs a lot more than tax increases to fix our economy. While it may not be official this morning, it certainly looks like Illinoisans have made their voices heard and want a plan for rescuing our state that is not just raise taxes, raise taxes and raise taxes some more."
The "fair tax" amendment, like all constitutional amendments, needed to pass by either 60 percent of votes cast on the ballot measure itself or a simple majority of all of those voting in the election.
Here's the language voters saw on their ballots:
The proposed amendment grants the State authority to impose higher income tax rates on higher income levels, which is how the federal government and a majority of other states do it. The amendment would remove the portion of the Revenue Article of the Illinois Constitution that is sometimes referred to as the "flat tax," that requires all taxes on income to be at the same rate. The amendment does not itself change tax rates. It gives the State the ability to impose higher tax rates on those with higher income levels and lower income tax rates on those with middle or lower income levels. You are asked to decide whether the proposed amendment should become a part of the Illinois Constitution.
What does that mean for taxpayers?
As it stands, the state constitution requires all Illinoisans to pay the same tax rate — currently 4.95 percent — whether they make $20,000 a year or $20 million. The governor's proposed change would have kept the same or lower rates for anyone making less than $250,000 a year and raise them on those making more than that.
The amendment would not directly set tax rates, but would give lawmakers the power to do so. A "yes" vote would have amended the constitution and allowed for a graduated state income tax. A "no" vote would have rejected the amendment and kept the flat tax.
Single and joint filers making less than $10,000: 4.75 percent (0.2 percentage points less)
Single and joint filers making $10,000-$100,000: 4.9 percent (0.05 percentage points less)
Single and joint filers making $100,000-$250,000: 4.95 percent (same as the current rate)
Single filers making $250,000-$350,000 or joint filers making $250,000-$500,000: 7.75 percent (2.8 percentage points higher)
Single filers making $350,000-$750,000 or joint filers making $500,000-$1 million: 7.85 percent (2.9 percentage points higher)
Single filers making more than $750,000 or joint filers making more than $1 million: 7.99 percent (3.04 percentage points higher)
Corporate rate: 7.99 percent (the same as the highest personal rate and 0.99 percentage points higher than the current 7 percent corporate tax rate)
For single taxpayers making less than $750,000 a year or married taxpayers making less than $1 million, the rates are marginal, meaning you only pay the higher rates on what you earn within each tax bracket. So, a single taxpayer making $101,000 a year would pay a 4.75 percent rate on the first $10,000, 4.9 percent on the next $90,000 and 4.95 percent on the remaining $1,000, resulting in a tax cut on all but $1,000 of his or her income.
Likewise, a single taxpayer making $251,000 a year would pay 7.75 percent on only $1,000, still resulting in an overall tax cut, according to the state's tax calculator. For taxpayers in the highest brackets, however, the 7.99 percent tax rate will be assessed on all net income starting with the first dollar, resulting in a significant tax hike.
According to Democratic lawmakers, 97 percent of Illinoisans would end up paying less. You can calculate exactly how much less or more you would end up paying here.
Pritzker, a billionaire, unveiled the plan last year. "It's wrong that I would pay the same tax rate as someone earning $100,000 or, even worse, pay the same tax rate as someone earning $30,000," he said at the time.
Proponents say the changes to the tax code would help close a hole in the state's budget. If it is not approved, the state will have to cut education, police and other services by up to 15 percent or hike taxes on everyone to around 5.95 percent, according to the governor's office.
That was before the coronavirus pandemic only deepened Illinois' financial woes.
But opponents of the amendment say the 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. And they don't trust the General Assembly not to squander the money or raise rates again once lawmakers have the power to do so, pointing to high-profile corruptions allegations against Illinois House Speaker Mike Madigan and others as proof lawmakers can't be trusted.
"(Voters are) being asked, 'Hey, trust us,' but what we're saying is we have a General Assembly that has just run amok on spending and hasn't addressed any of the other major problems," opposition group leader Jason Heffley told the Better Government Association, a nonpartisan watchdog.
Other 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.
The language on the ballot — calling Pritzker's proposal a"fair tax" — has also drawn criticism, and a lawsuit calling it biased.
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, according to Ballotpedia.
Ryne Danielson, Patch Staff, contributed to this article