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Lawsuit Filed Over Graduated Income Tax Ballot Measure

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Pamphlets sent to voters explain the graduated income tax constitutional amendment put to voters in the Nov. 2020 election.

SPRINGFIELD – The libertarian-leaning Illinois Policy Institute on Monday filed suit in an effort to derail Gov. JB Pritzker’s signature policy proposal — changing Illinois’ constitution to allow for a graduated income tax — by forcing the state to issue “corrective notices” about the intent of the tax change, or declaring the vote on the amendment “void.”

Though Election Day is four weeks away, early voting and voting by mail is already underway, and Illinois voters recently received pamphlets from Illinois Secretary of State Jesse White’s office explaining the proposed constitutional amendment.

It’s the language in these pamphlets at issue in the Illinois Policy Institute’s lawsuit, filed Monday morning in Cook County court. The suit, which lists three Cook County retirees and the IPI itself as plaintiffs, alleges that both the explanation of the proposed constitutional amendment and the arguments in favor of the amendment contained in the pamphlet are misleading.

The IPI, which has been a leading figure in the fight against Pritzker’s proposed tax change, alleges in the suit that the alleged misleading statements in the pamphlet violate both the Free and Equal Elections Clause of Illinois’ Constitution and the 14th Amendment of the U.S. Constitution. The one-count suit demands the Secretary of State to issue corrective notice to the pamphlet in line with suggestions outlined in the suit — or else risk the integrity of the vote.

“Plaintiffs further allege that the constitutionally impermissible defects in the Ballot Explanation and Pamphlet, unless immediately and sufficiently remedied, will render the election void in accordance with applicable law,” the complaint says.

Among other arguments, the suit alleges the explanation and arguments in favor of the amendment could “induce retirees into voting to impose on themselves a tax on retirement income.”

“If approved by voters, the [Progressive Income Tax] Amendment would eliminate important structural safeguards that deter legislators in the General Assembly from imposing new taxes on retirement income and deter legislators from imposing higher taxes on individuals with middle or low incomes,” the suit alleges.

Although Pritzker himself has repeatedly said he would not move to tax retirement income, and the pamphlet also explicitly says “This amendment does not tax retirement income,” opponents to the tax change have fixated on a comment made by Democratic State Treasurer Mike Frerichs this summer, in which he suggested the graduated income tax would open the door to taxing retirement income.

Frerichs’ comments at an Illinois Chamber of Commerce event are enshrined in the IPI’s Monday lawsuit. 

“One thing a progressive tax would do is make clear you can have graduated rates when you are taxing retirement income,” Frerichs said in June. “And, I think that’s something that’s worth discussion.”

The lawsuit points out that the proposed amendment itself says nothing of taxing retirement income, and points out that the promises made in both the explanation of the constitutional amendment and the arguments in favor of the amendment contained in the voter pamphlet are based on a law passed by the General Assembly in May 2019 in tandem with the graduated income tax amendment. 

That law contained the graduated tax rates that would only go into effect if the amendment is passed in November.

However, the IPI’s suit argues those rates are subject to change over time, bolstering its argument with examples from other states that impose a graduated income tax instead of a flat tax, including Connecticut, which recently implemented a tax on retirement income. 

Though the ballot explanation says the constitutional amendment “gives the State the ability to impose higher tax rates on those with higher income levels and lower tax rates on those with middle or lower income levels,” the IPI suit points out that the actual language of the amendment makes no such guarantees.

“In reality, the [Progressive Income Tax] Amendment does not give the State authority to only impose ‘higher tax rates’ on those with ‘higher income levels’ and ‘lower income tax rates on those with middle or lower income levels,’” the suit says. “Rather, the PIT Amendment merely gives the State authority to impose different tax rates on those with different income levels.”

The suit was filed days after the disclosure of $26.7 million in spending against the graduated income tax amendment by billionaire and conservative activist Ken Griffin, bringing his total spending on the effort to nearly $47 million so far. Pritzker has so far poured $56 million of his own money into a group founded by his deputy campaign manager in favor of the tax change.

The suit leans on a 2008 state appellate court decision upholding a trial court’s ruling requiring the Secretary of State to issue a corrective notice to voters after the Chicago Bar Association objected to the language contained in the constitutional amendment pamphlet explaining the motion put to Illinois voters every 20 years asking whether the state should convene a constitutional convention.

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