Illinois House Speaker Pushes Millionaires Tax as Property Tax Relief Looms

Illinois House Speaker Emanuel Welch says lawmakers should approve a 3% tax on millionaires to help fund property tax relief and public education. The proposal faces a critical deadline as Democrats split over how to divide the potential revenue.

House Speaker Emanuel "Chris" Welch supports adding a 3% income tax on those making more than $1 million annually. He says the tax could yield $4.5 billion yearly to address what he calls an affordability crisis for Illinois residents. Welch also wants the revenue to help pay down the state's pension debt and fund historically underfunded school districts.

The speaker made his backing of the concept clear during an interview. He said those who can pay more should pay more. If lawmakers can reach consensus on how to get it done and where the money should go, Welch wants to be part of that process.

The proposal requires approval from both the legislature and voters. It would need to pass as a constitutional amendment to change Illinois from a flat income tax state to a graduated rate system. Currently the state's income tax rate is 4.95%.

Democrats are divided on how to use the revenue. Rep. La Shawn Ford of Chicago proposed allocating all funds toward property tax relief in the form of $1,500 rebates per property owner. Rep. Natalie Manley of Joliet proposed splitting the revenue 50/50 between public schools and property tax relief.

Neither bill has been put to a House vote. Lawmakers face a May 3 deadline to get constitutional amendment proposals passed for inclusion on the November 3 general election ballot.

Illinois voters twice approved nonbinding ballot measures in 2014 and 2024 recommending a 3% tax on millionaires. Both times the Democratic-controlled legislature failed to act on the recommendations.

Gov. JB Pritzker also supports the concept of an additional income tax on the state's highest earners. In 2020 he poured millions of his own fortune into a campaign to amend the state constitution to establish a graduated income tax. The initiative failed.

Pritzker reported a net income of $10.3 million on his 2024 tax returns. Under a 3% millionaire tax, the governor would have to pay an additional $280,375.

The proposal has gained traction as property taxes continue to climb. A March analysis by Cook County Treasurer Maria Pappas found that property tax bills rose at twice the rate of inflation over the past 30 years in Chicago and suburban Cook County.

A new study by the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign projects a 3% millionaire tax could generate $3.8 billion in fiscal year 2027 and $4.4 billion by fiscal year 2030.

The study proposes three options for a lockbox to dedicate the new revenue. Option 1 would provide a $1,500 rebate to around 3 million Illinois homeowners. The rebate would cut the average property tax bill by about 15 percent at first.

Option 2 would use the revenue to fully fund public school districts in Illinois. State funding of public education in Illinois lags behind other states. This leads to public school districts needing to rely more on property tax revenue. Public school districts usually represent the largest chunk of a homeowner's property tax bill, about 62 percent on average.

An adequacy gap of about $3.1 billion statewide remains in school funding. The remaining amount after closing that gap would be more than $600 million.

Option 3 would split the money between property tax relief and school funding.

Former Gov. Pat Quinn is throwing his weight behind Ford's plan. Quinn said voters told the legislature and governor what the people wanted in 2024. He added that you do not want to turn your back on the voters especially now where there is an affordability issue all across Illinois.

Getting a millionaires tax codified into the state constitution has been a 12-year saga. It began under former Gov. Pat Quinn and has continued through the current administration.

The process requires two things. First the state's General Assembly must pass a bill to allow for a change from a flat rate to a graduated rate. At least 60 percent of members of both the state House of Representatives and Senate must approve such a bill.

The constitutional amendment would then need to be voted on by residents in an election. If at least 60 percent vote to approve the change or a simple majority of all voters who cast ballots approve, the change would be enshrined in the state's constitution.

A similar effort to change the state's constitution to allow for a graduated income tax failed in 2020. Dubbed the Fair Tax Amendment, lawmakers wanted to raise the tax rate starting on incomes of $250,000. Voters rejected the measure 47 percent to 53 percent.

That proposal did not come with a promise to dedicate the added revenue to a specific issue. The 2024 advisory referendum showed stronger support for a targeted approach. 61 percent of voters said they would approve of a 3% tax on millionaires specifically to provide property tax relief.

The Illinois House passed 133 bills last week sending them to the Senate for further deliberation. Many of them could have an impact on how taxpayer dollars are being spent.

House Bill 5093 would change the requirements necessary to receive in-state tuition rates. It removes language requiring students to have lived in the state while attending high school and not have been a resident of a different state before attending a state university.

To be eligible students will still be required to have spent two years at and receive a diploma from an in-state high school.

Under the governor property taxes have risen nearly 27 percent. They went from $31.8 billion in 2018 just before he took office to $40.37 billion in 2024. State decisions shape some of the largest pressures behind those tax bills.

Illinois public schools are primarily funded by property taxes. But school districts are forced to rely so heavily on those taxes in part because the state diverts a growing share of its education spending to pensions instead of classrooms.

From 1996 to 2016 state education spending increased by $5.4 billion. But two-thirds of that growth or $3.6 billion went to pensions rather than students. During that time pension costs grew from just over 8 percent of state education spending to more than one-third.

That trend has continued. Since 2016 general fund payments to the Teachers Retirement System of the State of Illinois have grown 68 percent outpacing the 55 percent increase in preK-12 education spending.

Pensions now consume nearly 40 percent of Illinois education budget. With more state money tied up in retirement debt school districts are left to fill the gap at least in part with property taxes.

Some of those pension obligations were in place before Pritzker took office. But last year he signed a sweetener for Chicago's fire and police pensions that will add an estimated $11.1 billion in liabilities by 2055.

Roughly 80 percent of Chicago property taxes go to the city's pensions.

In 2011 the state enacted the largest income tax hike in state history and kept 100 percent of the increase. At least some of that extra money could have offset rising property taxes.

Even the rules governing how property taxes can grow are set in Springfield. A report from Cook County Treasurer Maria Pappas found that state law has allowed property tax collections to rise at double the inflation rate over the past three decades.

Until the governor recognizes his part in the problem Illinois residents can expect their tax bills to keep growing.