After Voters Reject The Illinois Graduated Income Tax Proposal, Gov. JB Pritzker Says ‘Painful’ Cuts Likely

Illinois Graduated Tax Ballot Measure Not Passed
Katherine Nagasawa / WBEZ
Illinois Graduated Tax Ballot Measure Not Passed
Katherine Nagasawa / WBEZ

After Voters Reject The Illinois Graduated Income Tax Proposal, Gov. JB Pritzker Says ‘Painful’ Cuts Likely

Democratic Gov. JB Pritzker gave an impassioned and pointed response to voters’ rejection of his plan to move the state to a graduated income tax, blaming those who funded opposition to the plan for throwing “middle class families under the bus.”

The proposed constitutional amendment needed 60% of the vote, or a simple majority of support from those voting in the election.

On Wednesday, the Associated Press reported the amendment failed, with those voting ‘no’ on the constitutional amendment garnering around 500,000 more votes than those voting ‘yes’ on the question.

The referendum asked whether the state should switch from its current flat income tax structure to a graduated one, in which the tax rate increases the more an individual or couple earns.

“To the people of Illinois, you deserved a fairer tax system and you still do. But that didn’t happen,” Pritzker said at an unrelated news conference Wednesday. “Republicans swore their allegiance to the wealthiest interests in the state and they threw middle class families under the bus.”

The loss dealt Pritzker a decisive political blow, as the first-term governor had largely funded the campaign to try to gain its passage himself. He contributed $58 million from his own personal fortune to a group called Vote Yes For Fairness, which advertised that it’s fundamentally unfair the state taxes essential workers at the same rate as billionaires like him.

The proposed tax was estimated to bring in an additional $3 billion a year from taxing richer people at a higher rate.

“There will be cuts and they will be painful, Pritzker said. “And the worst thing is the same billionaires who lied to you about the fair tax are more than happy to hurt our public schools, shake the foundations of our cities and diminish our state. Maybe because they think it won’t hurt them.”

The proposal would have taxed people based on their income, rather than the current 4.95% flat tax rate. Lawmakers approved companion legislation to the amendment that would have taxed income in excess of $250,000 at a substantially higher rate than anything less than that.

Pritzker, who won election in 2018 while advocating for a graduated income tax, has warned residents that without the amendment’s adoption, the options for confronting the state’s massive budget hole is either cuts or an increase in the flat 4.95% income tax.

If Pritzker’s graduated income tax were Plan A, Pritzker said he intends to meet with legislative leaders in Springfield in the coming days about how to move forward and intends to move “expeditiously” toward addressing Plan B. Lawmakers are scheduled to return to Springfield on Nov. 17, though their in-person sessions could be complicated by a rising caseload of COVID-19 throughout the state.

He’s called on Congress to send financial support to states that are seeing massive budget holes due to the COVID-19 pandemic and he’s asked his administration to consider 5% cuts across the board in the next seven months.

During the campaign, Lt. Gov. Juliana Stratton suggested that if the measure fails, legislators would raise the flat tax by 20% — essentially a full percentage point to 5.94% — though it remains to be seen what the political appetite to raise the tax will be as election results continue to roll in across the country.

Well-funded groups that fought the initiative questioned if voters trusted state officials to spend more money. They also warned that the ballot question would lead to a new tax on retirement income, which is not currently taxed in Illinois. But nothing in the statute or the amendment would tax retirement income, which polls have shown is wildly unpopular.

Several campaign committees fought the amendment’s passage, but one in particular far outraised the others thanks to the $53.7 million contributions of Ken Griffin, Illinois’ second-richest resident, who is the founder and CEO of the hedge fund company Citadel.

Pritzker never mentioned Griffin by name during his news conference, but he clearly directed his frustration with the election results on the tax toward Griffin.

“I will never forget that some of the wealthiest and most powerful interests in Illinois did everything in their power to put the burden of this on workers and their families instead of shouldering some of the burden themselves,” Pritzker said.

Griffin has not agreed to an interview with WBEZ despite multiple requests. He did, however, release a statement Wednesday morning before the governor’s news conference.

“The citizens of Illinois have delivered a clear message to our political leaders in Springfield,” Griffin wrote. “Now is the time to enact long overdue reforms to save our state from fiscal ruin. Illinois should forever be a place where people want to live, work and raise a family.”

Griffin and Pritzker’s contributions easily made the ballot question the most expensive race of its type in Illinois history, and one of the most expensive of anywhere in the country.

The most expensive ballot initiative on record is California’s Proposition 8 in 2018, which aimed to limit charges for outpatient kidney dialysis and met fierce resistance from pharmaceutical companies. Both sides spent about $135 million on that initiative, said Peter Quist, research director for the National Institute on Money in Politics.

Since 1970, when the current state constitution took effect, the state legislature has put 22 proposed amendments before voters, including this one. Thirteen amendments have won voter support, and eight have failed.

Historically, Illinois’ electorate has embraced the concept of having the wealthiest pay higher individual tax rates.

In 2014, voters approved an advisory referendum supporting a 3% tax on millionaires, with proceeds going to education. Nearly 60% of all ballots cast were supportive of the idea, while nearly 64% of those voting on the particular question approved — percentages high enough in both cases to have passed had the question been posed in the form of a constitutional amendment.

Tony Arnold covers Illinois politics for WBEZ. Follow him @tonyjarnold.