Proposed amendment would remove prohibition on multiple income taxes
SPRINGFIELD – Opponents of Gov. J.B. Pritzker’s proposal for a multi-tiered income tax structure came out with a new argument Tuesday after the governor and Democratic leaders in the General Assembly unveiled their proposed language for a constitutional amendment.
Under the proposed language, they argued, the state would actually be allowed to levy multiple income taxes, each for a different purpose, which would effectively allow the state to tax the same income multiple times.
Supporters of the proposal say that’s not true. Still, the issue likely will be the source of heated debate as the proposal is discussed in the House and Senate.
At issue is language in the Illinois Constitution which authorizes the state to levy a tax on income, “at a non-graduated rate.”
The very next sentence provides: “At any one time there may be no more than one such tax imposed by the State for State purposes on individuals and one such tax so imposed on corporations.”
That language does not appear in the proposed constitutional amendment that Pritzker and Democratic leaders unveiled Tuesday, prompting Republicans and business leaders to warn that it could lead to a system of multiple income taxes.
“Right now in the Constitution, we are protected,” said Rep. Tony McCombie, a Savanna Republican, speaking to reporters outside the governor’s office. “I and the middle class are protected by the flat tax. And we also cannot tax a dollar twice, and this amendment takes that away.”
Todd Maisch, president and CEO of the Illinois Chamber of Commerce, agreed, saying removal of the language could pose serious problems.
“That means it could set up for all kinds of surcharges,” Maisch said. “It means you could go ahead and actually have a second income tax to go ahead and fund, I don’t know, transportation or whatever the other need is. But they are eliminating that taxpayer protection that says, ‘this dollar of income can only be taxed once by the state.’”
But Sen. Don Harmon, an Oak Park Democrat and lead sponsor of the amendment in the Senate, said that simply isn’t true, and he accused critics of the plan of grasping at straws.
“I think they’re getting more manic in their opposition,” Harmon said in a phone interview.
According to Harmon, the prohibition on levying multiple income taxes was simply a companion to the requirement for a single, flat tax rate. Without that prohibition, he said, the framers feared that lawmakers could levy a series of “flat” taxes on different levels of income – say, for example, one on income up to $30,000; another “flat” rate on income between $30,000 and $60,000, and so on – effectively creating a multi-tiered tax structure through a series of limited “flat” taxes on different levels of income.
By allowing the state to create a multi-tiered tax structure, Harmon said, the prohibition on multiple taxes would become unnecessary.
Furthermore, he said, if supporters of the proposed change had left in the prohibition on multiple taxes, critics would likely argue that a multi-tiered structure would violate that prohibition.
The Senate Executive Committee is scheduled to begin debating the proposed amendment on Wednesday. If approved by three-fifths majorities in both chambers, it would be placed before voters for approval in the November 2020 general elections.
Pritzker has said he wants the General Assembly to pass both the amendment and enabling legislation that would establish the new tax brackets and rates before the end of the regular session in May so voters will know what the new tax structure would look like when they vote on the amendment.
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