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WITH
ILLINOIS ON DECK, STATE TAX HIKES JUST LOST BIG AT THE BALLOT BOX
Illinois Policy Institute/
Austin Berg
If other states’ recent tax votes are any
indication, Pritzker’s proposal could be a tougher sell than he thinks.
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 Political horse races came to an end Tuesday in 13 statewide
elections across the country. News of a Democratic “trifecta” in Virginia and
the potential toppling of Republican Kentucky Gov. Matt Bevin dominated
headlines.
But in red and blue states with referenda on the ballot, voters also made
choices to protect their pocketbooks from higher taxes. With a major tax hike on
deck for November 2020, could Illinois be next?
In Texas, a constitutional ban on enacting a state income tax won a whopping 74%
of the vote. Recall that last November, Beto O’Rourke received nearly half the
vote in the Lone Star State.
When it comes to taxes, Illinois’ constitution has been moving in the opposite
direction.
Illinois first adopted a 2.5% individual income tax in 1969 with the backing of
Democratic Chicago Mayor Richard J. Daley and Republican Gov. Richard Ogilvie.
The following year, in a compromise meant to ensure voters approved the state
constitution, delegates to the 1970 Illinois Constitutional Convention rejected
amendments allowing for a graduated income tax, and instead passed a
constitutional flat tax protection.
The initial 2.5% rate has nearly doubled in the decades since, mainly through
two broken promises of “temporary” income tax hikes. Gov. J.B. Pritzker’s
progressive income tax ballot measure would reopen the constitution and remove
the flat income tax protection. If voters approve the constitutional amendment,
Pritzker’s introductory rates would top out at 7.99% for the highest earners.
Texans need not worry about this kind of paycheck politics. Their state income
tax is likely dead for decades.
Colorado also had a big tax question on the ballot.
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Since 1992, Colorado politicians have had to go hat
in hand to voters for approval before passing tax hikes or new debt.
This is because of a state law called the Taxpayer Bill of Rights,
or TABOR.
I joined Colorado Springs Mayor John Suthers on a panel last week on
urban governance. “It’s made us stronger,” he said about TABOR, “and
it’s kept government accountable.”
That’s one reason his city of nearly half a million
residents is growing rapidly, aided by an influx of Illinoisans.
Coloradoans Tuesday saved one of the key tenants of TABOR. Under the
law, state revenue can grow in line with inflation and population
growth. But any natural revenue growth beyond that is automatically
refunded to taxpayers. Proposition CC would have ended those
automatic refunds, which average around $30 to $90 a year for
married couples filing jointly. The proposition died, with 55%
voting no and 45% voting yes. Notably, Coloradoans rejected
switching from a flat income tax to a progressive income tax last
year by roughly the same margin.
Washington voters had their voices heard on taxes through an
advisory referendum, which is non-binding. When asked if the state
should retain a 0.58% payroll tax to fund health care, 64% voted no.
Illinois voters aren’t used to having any direct vote on taxes.
They’ll soon get one.
A $3.4 billion progressive income tax hike is Pritzker’s prized
policy proposal, and he will spend tens of millions of dollars
convincing Illinoisans to vote for it.
Time will tell whether voters oblige him. If other states’ recent
tax votes are any indication, Pritzker’s proposal could be a tougher
sell than he thinks.
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