Illinois House Leadership Endorses Millionaires Tax as Democrats Debate Property Tax Relief vs School Funding
Illinois House Speaker Chris Welch has endorsed a proposed millionaires tax that would generate billions in new revenue, but Democratic lawmakers remain divided over how to spend the money and how to get it on the November ballot.
Two competing constitutional amendment proposals are currently being considered by the House. State Rep. La Shawn Ford of Chicago has offered an amendment that would allocate all of the potential $4.5 billion yearly windfall toward property tax relief in the form of $1,500 rebates per property owner. State Rep. Natalie Manley of Joliet has offered a competing plan that would split the proceeds between public schools and property tax relief.
Neither bill has been put to a House vote as lawmakers approach a May 3 deadline to get constitutional amendment proposals passed in order to appear on the Nov. 3 general election ballot.
In an interview with WBEZ, House Speaker Welch did not endorse either plan but made his backing of a millionaires tax clear. I am a big supporter of the fact that those who can pay more should pay more. If we can come to some type of consensus on how to get it done and where the money should go, I want to be a part of it. Welch said.
Ford has said he would work hard to lobby the leader of his Democratic caucus on a plan that, as of now, leaves out school funding. We have to keep pushing for him to see that property tax relief is probably going to have the best impact for families.
Manley, meanwhile, said she filed her constitutional amendment last year because she wants our schools to be the gold standard, and I do not want to leave our schools behind in all of this. With her plan, half of the millionaires tax proceeds would go to public schools and the other half toward property tax relief.
Both proposals would assess net income in excess of $1 million with a new 3 percent tax.
Governor JB Pritzker has also expressed support for the concept of an additional income tax on the states highest earners. In 2020, Pritzker poured millions of his own fortune into a campaign to amend the state constitution to establish a graduated income tax, but the initiative failed. To pay the bills of the state of Illinois, it is fairer if the wealthiest people in the state and the wealthiest corporations in the state pay more than average folks, working folks, and the most vulnerable. Pritzker said at a press conference earlier this year.
The governor himself would face the new tax. Pritzker and his wife MK Pritzker reported a net income of $10.3 million on their 2024 tax returns. Under the proposed 3 percent tax, the billionaire governor would have to pay an additional $280,375.
The debate over property taxes has become a potent electoral issue. A March analysis by Cook County Treasurer Maria Pappas found that property tax bills rose at twice the rate of inflation for the past 30 years in Chicago and suburban Cook County. While affordability became the buzz word for candidates on the campaign trail during the March primaries, Welch has made it a centerpiece for the spring legislative session in Springfield.
Welch said a millionaires tax is a reasonable way to address what he calls an affordability crisis for Illinois residents in addition to paying down the states pension debt and funding historically underfunded school districts. If we give our schools more, maybe we can pass legislation that restricts how high they can raise their property tax levies. Welch said.
Getting a millionaires tax codified into the state constitution has been a 12 year saga, with former Gov. Pat Quinn at the center of it. Illinois voters twice approved a nonbinding ballot measure in November 2014 and again in 2024, recommending the General Assembly impose an additional 3 percent income tax on those who make a million dollars or more annually. However, the Democratic controlled legislature failed to adopt the recommendations during three spring legislative sessions.
Quinn is throwing his weight behind Ford, who has also won the Democratic nomination to replace retiring U.S. Rep. Danny Davis. The voters told the legislature and the governor what the people wanted in 2024. You do not want to turn your back on the voters and say Quinn said.
The Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign released a study this month analyzing the potential economic impact of a millionaires tax. The study found that a 3 percent surtax could generate about $3.8 billion in fiscal year 2027 and $4.4 billion by fiscal year 2030.
The researchers proposed three options for how to use the money with a lockbox to dedicate the new revenue specifically to either property tax relief, public education funding, or both. Option one would provide a $1,500 rebate to around 3 million homeowners in Illinois, costing around $4.6 billion. The researchers said the rebate would cut the average property tax bill by about 15 percent at first. Option two would use the revenue to fully fund public school districts in Illinois, which would cover the $3.8 billion adequacy gap and leave more than $600 million for property tax relief grants or free community college tuition. Option three would dedicate between $700 million and $900 million per year to cover the amount of additional property tax revenue school districts require every year, with about $50 million per year to add to school funding.
The study also analyzed the economic impact of each option. Option one would boost the states economic activity by about $1.6 billion and create about 12,000 jobs. Option two would boost economic activity by $3.6 billion and save or create about 25,000 jobs. Option three would add about $1 billion to the states economy and create about 7,000 jobs.
One of the key criticisms of such a policy is that higher taxes would push higher earners to leave Illinois for states with lower taxes. Austin Berg of the Illinois Policy Institute, a nonpartisan research organization, argued that while a millionaires tax might sound appealing to some, it could come at a cost. He argued on X that Illinois has lost nearly 1 million taxpayers to other states over the last decade and the group leaving the fastest was those making more than $200,000 per year. This is a bad idea at a bad time. We cannot afford to keep losing people and investment to other states. Berg wrote.
The study on a millionaires tax addressed this concern, arguing that taxes have been found to have very little influence over migration patterns, according to previous research. A 2016 study found that millionaires tend to move at a lower rate than the population as a whole. It is lower income individuals who tend to be more likely to move due to factors like better job opportunities. The researchers said millionaires are more likely to be married, have children, and are less mobile than lower income individuals.
A similar effort to change the state constitution failed in 2020. Dubbed the Fair Tax Amendment, lawmakers wanted to raise the tax rate starting on incomes of $250,000. That proposal did not come with a promise to dedicate the added revenue to a specific issue, though. Voters rejected the measure 47 percent to 53 percent.
The process to implement a millionaires tax would require two things. First, the states General Assembly would have to pass a bill to allow for a change from a flat rate to a graduated rate, like 26 other states have. At least 60 percent of members of both the state House of Representatives and Senate would need to approve such a bill. The amendment to the state constitution would then need to be voted on by residents in an election. If either 60 percent vote to approve the change or a simple majority of 50 percent plus one of all voters who cast ballots approve, then the change would be enshrined in the state constitution.
In 2024, 61 percent of voters said they would approve of a 3 percent tax on millionaires specifically to provide property tax relief in an advisory referendum.