Pritzker’s “Fair Tax” in Limbo (Updated)

Amending the Illinois state constitution to allow the legislature to impose a graduated income tax has been a keystone of Gov. Pritzker’s policy plans since his election. It was on the ballot yesterday and requires, somewhat confusingly, either approval by 60% of those voting on the amendment or 50%+1 of those voting. It failed to get reach either yesterday and, consequently, today its fate is unknown and will remain so for weeks. The Chicago Tribune reports:

Illinois voters on Tuesday got their say on a far-reaching ballot question about the future of the state income tax following millions of dollars in TV ads bankrolled by battling billionaires Gov. J.B. Pritzker and hedge fund owner Ken Griffin.

More than $124 million was raised by groups for and against a proposed change to the Illinois Constitution that would switch the state from a flat-rate income tax to a graduated-rate system in which taxes would increase as income rises.

After all that, the fate of the “yes or no” referendum might remain unknown for days or weeks as late-arriving mail-in votes continue to be counted. That’s because there are two ways the proposal can pass: It needs either 60% support among those voting directly on the question or more than 50% support of those voting in the election.

As for the first pathway, the amendment was falling far short of the 60% benchmark. The question had 45.9% support among those voting directly on the amendment. Another 54% voted against the question with nearly three-quarters of the state’s precincts reporting. All totals are unofficial.

The anti-amendment Coalition to Stop the Proposed Tax Hike Amendment said it believed the proposal had been defeated.

“When all the votes are counted, we believe there will be more ‘no’ votes than ‘yes’ votes, and that will be a win for small business owners, middle-class families, family farmers, retirees, and large employers,” group spokeswoman Lissa Druss said in a statement. She said such a defeat would send “a resounding message” from voters that they “cannot trust Springfield politicians with another tax hike.”

The Pritzker-backed pro-amendment group was withholding judgment on the outcome, however.

“Until every ballot is counted, we will stand with the Illinoisans who cast a ballot by mail, early and in-person today to ensure their voices are heard,” said Quentin Fulks, who chairs Vote Yes for Fairness.

Under the second pathway, it could take up to two weeks for a result to become clear. That’s because the calculation relies on the total number of ballots cast, and Illinois law allows mail-in ballots to be counted until Nov. 17 if they were postmarked by Election Day.

Should the amendment fail the governor has threatened a number of consequences including steep increases in other taxes or a 15% cut in state services. There are many things he hasn’t considered, e.g. pay cuts for state employees or amending the constitution to allow the legislature to reduce public employee pensions.

The governor and the legislature have been kicking this can down the road for decades. We may have reached the end of the road.

The graduated income tax has been promoted by the governor as compelling billionaires and millionaires to pay their fair share, hence the somewhat confusing “Fair Tax”. In my view the shortcoming of the strategy is that the state has no practical way of forcing the 17 billionaires and quarter million millionaires who live in the state to remain here and, indeed, they’ve been leaving in droves over the last few years. That would impel the legislature to depend on people who are aren’t millionaires for the desired revenue and that, indeed, has been the observation of those opposing the “Fair Tax” amendmewnt. IMO the governor and legislature have been feckless in not “sweetening” the proposed amendment by adding protections, economization measures, and other provisions to reach a compromise with those who oppose the amendment.

We’re left wondering “Now what?”

Update

The Chicago Tribune reports that the group supporting Gov. Pritzker’s “Fair Tax” amendment has conceded defeat:

The group backed by Democratic Gov. J.B. Pritzker to pitch his proposal to enact a graduated state income tax in Illinois acknowledged the constitutional amendment’s defeat Wednesday and warned of a financial morass as a result of the rejection of the proposed constitutional amendment.

“We are undoubtedly disappointed with this result but are proud of the millions of Illinoisans who cast their ballots in support of tax fairness in this election,” said Quentin Fulks, chair of the Pritzker-funded Vote Yes for Fairness group.

“Now lawmakers must address a multi-billion dollar budget gap without the ability to ask the wealthy to pay their fair share. Fair Tax opponents must answer for whatever comes next,” Fulks said, pointing the finger at “Republican legislators and their billionaire allies” who opposed it.

They’re pointing their fingers in the wrong direction. As another famous Illinoisan once put it, you can fool all of the people some of the time and some of the people all of the time but you can’t fool all of the people all of the time. The governor and legislators have been urging people to trust them without giving them actual reasons other than the “D” behind their names to trust them. Experience has told the voters that our governor and legislators are not to be trusted.