n 2020, Illinois voters overwhelmingly voted down a signature initiative of Governor Pritzker that sought to enact a graduated income tax system in the State of Illinois. Senator Martwick proposed SB2105 this past week, the bill proposes installing a graduated income tax in Illinois.
While this legislation has been brought forward, it is important to note that this specific bill does not propose a constitutional ballot initiative. Instead it seeks to change the income tax system by statute, something that is expressly not authorized by the state constitution.
The Illinois Constitution clearly lays out that the state’s income tax system is non-graduated:
SECTION 3. LIMITATIONS ON INCOME TAXATION
(a) A tax on or measured by income shall be at a
non-graduated rate. 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. In
any such tax imposed upon corporations the rate shall not
exceed the rate imposed on individuals by more than a ratio
of 8 to 5.
Ill. Const. art. IX, sec. III.
This language shows why it was necessary to try to have this change passed by referendum, rather than by statute.
Senator Martwick’s SB2105 proposed a top rate of 6.95%, which is over a 40% hike from the current income tax rate and over an 85% increase from what the rate was until 2017. The 2017 increase raised the individual flat rate from 3.75% to 4.95%, a supermajority of the General Assembly voted to override Governor Rauner’s veto of the proposal.
While it seems that this bill would not pass constitutional muster, this proposal shows that the talk is unlikely to go away anytime soon. There is a good chance that a referendum will end up on the ballots of voters again soon. While an effort from Republican Senate Leader John Curran would block the ability to ask voters again, that measure is unlikely to go anywhere with Democratic super majorities in both chambers.