How to address the state’s high property taxes has emerged as the main sticking point in the debate over a proposed progressive income tax in the Illinois House.
The amendment to ask voters to change the constitution’s flat income tax to one with higher rates for higher earners passed a House committee this week and is poised for a full House vote, but some Democrats were still on the fence.
The Senate sent over a limited property tax freeze with the constitutional amendment and a progressive income tax rates bill, but state Rep. Michael Zalewski, D-Riverside, said there’s recognition there needs to be property tax relief.
“A property tax freeze is burdensome on local governments, school districts,” Zalewski said. “Property tax relief can take many different permutations.”
What that relief would look like isn’t clear.
Opponents of a progressive income tax said during a House committee hearing Monday that in order to address the state’s high property taxes, there must be pension reform as many local governments have said all of their share of property taxes are going to pay local police and fire pensions. There’s been no movement on a proposed constitutional amendment to reform pensions.
When it comes to the progressive tax rates, the governor proposed rates and the Senate passed a different rate structure. That measure remains in a House committee. Zalewski said the House’s rates bill is still being hashed out.
“But we also are being responsive to our colleagues who feel like they need something tangible in terms of property tax relief and we’re getting there,” Zalewski said.
Gov. J.B. Pritzker said a progressive income tax with higher rates for higher earners will bring billions into the state’s coffers, helping shore up its troubled finances.
Illinois Chamber of Commerce CEO Todd Maisch said when the governor unveiled his rates proposal that lawmakers should tie rates to the amendment so taxpayers know what to expect. Rates aside, Maisch said looking at tax increases first is the wrong approach.
“Cutting and taxing can’t get the job done by itself, we do recognize that,” he said. “You do need to probably do both of those things, but the taxing should be the last component, not the first, but that’s what we’re leading with here today yet again sending a terrible message to job creators in this state.”
Maisch and Republicans have said the state needs to capture more revenue through economic growth, not higher taxes.
The House could take up the proposed amendment as early as this week.