The state of Illinois has a problem. It’s broke. The state government owes billions of dollars to vendors, $137 billion to its pension funds, and just a couple of years ago had to issue IOUs as it ran out of cash.
The current governor and legislature want to solve this by raising state income taxes on certain earners, but they’re held back by the state constitution which allows for just one flat tax, which is the same for people and corporations. Now they have a fix; pass a constitutional amendment that gives them the leeway to make the tax rate whatever they want for whomever they want.
Unfortunately, that’s not how the amendment is described on the ballot. Instead, it reads:
The proposed amendment grants the State authority to impose higher income tax rates on higher income levels, which is how the federal government and a majority of other states do it. The amendment would remove the portion of the Revenue Article of the Illinois Constitutions that is sometimes referred to as the “flat tax,” that requires all taxes on income to be at the same rate. The amendment does not itself change tax rates. It gives the State ability to impose higher rates on those with higher income levels and lower income tax rates on those with middle or lower income levels. You are asked to decide whether the proposed amendment should become part of the Illinois Constitution.
The actual amendment, as opposed to this summary, allows the state to charge any income tax level on any income stream or income level, which could mean charging higher rates to middle-income earners as well as high-income earners, charging higher rates on IRA income or capital gains, and charging different rates on corporate income. But you wouldn’t know that from the summary, which makes it sound like the state can only raise taxes on high-income earners.
With so much red ink, it’s likely all the workers in Illinois will soon learn exactly what sort of freedom to tax they are granting their government.