CHICAGO — A proposal sponsored by the Illinois House Speaker to impose an income tax surcharge on individuals with income above $1 million advanced to the full House Thursday.
A separate measure that would shift the state's income tax system from a flat rate to a graduated rate based on income failed in a vote in the same House Revenue and Finance Committee Thursday.
If approved by the General Assembly, the constitutional amendment imposing a 3% surcharge could go to voters as soon as November.
House Speaker Michael Madigan unveiled the "millionaire's" surcharge a week ago ahead of Gov. Pat Quinn's announcement of a budget plan that relies on making permanent the state's 2011 income tax hike that is slated to be scaled back on Jan. 1. Making it permanent would stave off the loss of $1.6 billion in revenue next year and $4 billion in fiscal 2016.
Madigan backs Quinn's proposal but is still pushing to get his plan on the ballot. The extra $1 billion in annual revenue it would generate would go to school funding. Republicans oppose the proposal.
The graduated tax amendment that failed would have asked voters to shift tax rates to a sliding scale. A similar proposal is pending before a Senate committee.
Under Madigan's plan, the first $1 million of an individual's income would continue to be taxed at the current personal rate with any additional income facing an additional 3 % surcharge on top of the current rate of 5%.
If the General Assembly does not approve Quinn's tax extension proposal, the rate would drop to 3.75% in January. It stood at 3% before lawmakers increased it in 2011.
"This is not a complete solution to our education funding issues, but it is a fair and equitable way to reverse a decline brought on by the national economic problems and will help address a number of spending pressures that vary among school districts," Madigan said of his surcharge proposal.
"Some districts may see a need to use these resources for capital construction, while others will want to offer local property tax relief. Illinois is not a one-size-fits-all state and this increase on millionaires recognizes the need for school districts to set their own priorities when spending state dollars," Madigan said.
Republicans have accused the speaker of pushing the surcharge as a jab at Quinn's GOP challenger Bruce Rauner, a wealthy businessman. Madigan has denied that he has a political motive.