Millionaire tax fails to gain enough support

By Ben Szalinski
Capitol News Illinois
bszalinski@capitolnewsillinois.com

A “millionaire tax” proposal floated in the Illinois House failed to gain enough traction in Springfield this week, making it increasingly unlikely that voters will be asked to approve the measure in November.

House speaker Emanuel “Chris” Welch, D-Hillside, confirmed to reporters on Wednesday night that the constitutional amendment proposed by representative La Shawn Ford, D-Chicago, was not going to be called for a vote this week. The House is not scheduled to be in after Thursday before the May 3 deadline to put constitutional amendments on the November ballot.

“Everyone knows it needs a lot more work,” Welch said. “There were a lot of questions that people had and they deserve to have those answers to those questions.”

Increasing taxes on millionaires was a priority for Welch and many progressives in Springfield, but the speaker said it didn’t have the votes to pass the House. Constitutional amendments require a 71-vote super majority in the chamber and the proposal was deeply unpopular with Republicans, meaning at least 71 of the House’s 78 Democrats would need to push it out to the Senate.

“We were very close, very close,” Welch said. “But close is not enough and we’re committed to getting it right. We’re going to continue to work towards it.”

It could be a few years before lawmakers revisit the concept. The next deadline for approving constitutional amendments is early May 2028, six months ahead of the presidential election.

How it would work

Illinois’ constitution mandates a flat tax rate regardless of income. Voters would have to approve an amendment changing that to tax millionaires more.

Under the amendment being floated in Springfield, income over $1 million would be taxed at 3%. It would be the first time under the current constitution that a specific tax rate on income would be included in the guiding document, which has led some people to question if that’s a smart choice given that the value of money changes over time and the constitution cannot be easily changed.

The state’s current 4.95% tax rate is dictated by lawmakers.

The amendment also called for splitting revenue from the millionaire tax equally between a property tax relief fund and K-12 education. There was also disagreement among lawmakers about exactly where the revenue should go.

A study published by researchers at the Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign last month found the tax would generate $3.8 billion in its first full year and $4.2 billion by 2030 — revenue estimates the researchers labeled as “conservative.”

The nonpartisan Commission on Government Forecasting and Accountability pegged the number at $2.1 billion annually but cautioned that it could fluctuate greatly by year. About 1% of people in Illinois would pay the tax.

Political will

The proposal was more specific than a proposed amendment in 2020 that would’ve allowed a graduated tax structure in the state. But that was rejected by voters, and even though 61% of voters signaled support for the millionaire tax in 2024 in a nonbinding referendum, some lawmakers were still skeptical a binding amendment would get voters’ blessing.

“The message that was very clear to me after the last effort was the voters weren’t quite ready for that,” Senate president Don Harmon, D-Oak Park, told reporters last week. “So we’re going to have to do some serious evaluation here before advancing anything right now.”

The bill passed out of a House committee on Tuesday on a party line vote.

“They do not trust Illinois government with more money,” Rep. Amy Elik, R-Godfrey, said in the committee. “They don’t trust that it’s really doing to go to these things and there’s nothing in this language that’s going to guarantee that.”

Even governor JB Pritzker, who was the cheerleader of the 2020 amendment and spent millions of dollars supporting it, wasn’t pressuring lawmakers to approve a new amendment this year. He had said he continues to support the concept, but it will be up to the legislature if they want to place it on the ballot. Amendments don’t require the governor’s signature after passing the legislature.

Welch also told reporters he hopes to get support from business groups for the amendment in the future. Multiple business groups, who also opposed the 2020 amendment, registered their opposition to this year’s proposal.

Voters may still see an amendment on redistricting in November, however, after the House approved one on Wednesday. The Senate must still approve it by the end of next week for it to appear on the ballot.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.