The News-Gazette.com:Sen. Frerichs proposes new tax structure

Sen. Frerichs proposes new tax structure

By Kate Clements

Friday, October 19, 2007 7:48 AM CDT

SPRINGFIELD – State Sen. Mike Frerichs, D-Champaign, wants Illinois to switch to a graduated income tax, meaning high earners owe a larger percentage than those with lower incomes.

"We think this might be the way to truly reform education funding in this state and also provide property tax relief," Frer-ichs said.

It won't be an easy task. The Illinois Constitution specifies that "a tax on or measured by income shall be at a nongraduated rate." Frerichs and state Sen. Kwame Raoul, D-Chicago, are forming a committee to work on changing that provision of the constitution.

"This isn't going to happen with just me and Sen. Raoul; we are looking to build a much larger coalition," Frerichs said.

Getting a constitutional amendment on the ballot requires a three-fifths majority vote in both the House and the Senate or a petition with nearly 280,000 signatures – enough to equal at least 8 percent of the total votes cast in the last election for governor. Once it gets on the ballot, it needs approval from 60 percent of those voting on the question or a majority of the people who voted in that election.

Of the hundreds of amendments proposed since the 1970 constitution was adopted, fewer than 20 made it onto the ballot – and only 10 received the required voter approval. The 1980 cutback amendment, which ended cumulative voting and reduced the size of the Illinois House, is the only one that was the result of a successful petition drive.

"It's a big hurdle, but I also think I was elected to do what is right, not what is easy," Frerichs said.

Ralph Martire, executive director for the Center for Tax and Budget Accountability, said he strongly supported the idea of graduated income tax.

"It's the appropriate way to impose an income tax if you want to have a system that taxes fairly and responsibly in a capitalist economy," Martire said. "We have a flat tax, which means we leave too much of the economic growth out of our tax structure and we place the greatest burden on low- and middle-income taxpayers."

Advocates of a flat income tax believe it is more fair to charge all taxpayers at the same rate, and say such systems are simpler and more stable.

The state income tax was created as a flat tax in 1969 because the 1870 Constitution required uniformity in taxation and did not permit a graduated rate, according to Charlie Wheeler, director of the Public Affairs Reporting program at the University of Illinois-Springfield.

There had been a bitter political battle over the rates that businesses and individuals would pay, so the delegates to the 1970 constitutional convention felt it was best to write the new flat-rate income tax into the constitution as is, Wheeler said. The rates themselves were not included, but the 1970 Constitution does state that the income tax rate on corporations "shall not exceed the rate imposed on individual by more than a ratio of 8 to 5." When the income tax was first imposed, individuals paid 2.5 percent and businesses paid 4 percent.

"That was the reason why it was left that way," Wheeler said. "I'm sure there have been amendments proposed over the years to change it, but none of them ever made it to the ballot."

In 2003, Lt. Gov. Pat Quinn called for a "Taxpayer Action Amendment" to impose a 3 percent tax surcharge on incomes of more than $250,000 a year and use the money to offer property tax rebates to homeowners and supplemental aid to public schools. The plan was rejected.

Frerichs is hoping the graduated income tax campaign will be more successful, but it is still in the very early stages. He said the state has some more pressing issues to address right now, including the governor's budget vetoes, Chicago-area mass transit problems and a proposal to expand gambling to pay for a massive new infrastructure program.

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Monday, October 22, 2007 East Central Illinois