ILLINOIS (IRN) — Supporters of a progressive income tax are distancing themselves from any talk about taxing retirement income.
Opponents of changing the flat tax have said small businesses will take the brunt of the proposed tax hike.
Illinois lawmakers can already change the law to tax retirement income. Some say voters approving a change from a flat income tax to a progressive one will make taxing retirement at certain levels easier for lawmakers.
In front of voters this election is a question asking if the state constitution’s flat income tax should be changed to a structure with higher rates on higher earners.
Carol Edelson, a board member of Jane Adams Seniors in Action, supports the change. She called a news conference Wednesday and downplayed concerns the amendment will allow lawmakers to tax retirement income.
“They already have that power,” Edelson said. “They are not doing it. And if it happens in the future, we’ll address that.”
Edelson joined with AARP volunteers in supporting the constitutional amendment.
State Rep. Joe Sosnowski, R-Rockford, opposes the amendment and opposes taxing retirement. He said if voters approve changing the flat tax to one with graduated rates, it would make it easier for the Democratic majority to pass future tax hikes.
“And unfortunately they would not have to go back to voters,” Sosnowski said. “They could just pass that through the Legislature, put it on the books, and it just opens the door to more and more income taxes.”
The amendment would need 60 percent approval to be adopted, or 50 percent of those who turn out to the election.
Gov. J.B. Pritzker said Illinois won’t tax retirement income and dismissed critics who said changing the flat income tax to one with progressive rates on higher earners will make that easier.
“I wanna preserve the ban on retirement taxes and I stand with all Democrats opposed to raising retirement taxes, but the people who oppose the fair tax want to put the burden on people that can’t afford it,” Pritzker said.
Despite a proposal from the Civic Federation and a bill Pritzker’s revenue director proposed when he was in the legislature in 2017, there is no legislative effort underway to tax retirement income.
Todd Maisch with the Illinois Chamber of Commerce said that debate aside, small businesses would be hit hard.
“Amid snowballing corruption investigations and a COVID-19 recession, now is the most dangerous time to give our politicians free-reign of our paychecks,” Maisch said. “The progressive income tax amendment is simply a big bag of cash dropped at the back door of the Capitol for the ethically-challenged legislature to spend however they want.”
The nonpartisan Tax Foundation said if Illinois voters approve the change, it would take the state’s tax competitiveness among the entire country down from No. 36 to No. 47. They also project the change would make the corporate tax in Illinois at nearly 10.5 percent, the second-highest in the nation.
“Were Pritzker’s proposal adopted,” writes Tax Foundation Senior Policy Analyst Jared Walczak, “Illinois would trail its peers in just about every aspect of its tax code. If businesses and individuals are leaving the state now, these policies can only make the problem worse.”