SPRINGFIELD — Fewer than 20,000 Illinois millionaires would account for 80 percent of an estimated $3.4 billion in added income tax revenue under a graduated tax plan being touted by Gov. J.B. Pritzker, his office said in a release Friday.
Per Pritzker’s projections, 19,939 Illinois taxpayers whose income exceeds $1 million would pay an added $2.72 billion in combined taxes to the state; 37,391 filers earning between $500,001 and $1 million would pay an added total of $629 million; and 117,535 filers earning between $250,001 and $500,000 would pay an added total of $361 million.
The other 6 million-plus Illinoisans would see their total combined tax burden shrink by about $177 million.
In recent days, conservative think tank Illinois Policy Institute has suggested Pritzker’s estimates for increased tax revenue were exaggerated by $1 billion or more, and the Civic Federation, a nonpartisan government research organization, said it could not duplicate Pritzker’s estimates.
A news release from Pritzker’s office said the Governor’s Office of Management and Budget worked with the Illinois Department of Revenue “to arrive at a realistic projection for the amount generated by the fair income tax.”
The graduated tax would require a constitutional amendment, which needs approval from voters to become law, so its passage is not possible until 2021 at the earliest.
Because of this, Pritzker’s team used data from the 2016 tax year and assumed filers’ income would grow at the most recent five-year compound annual growth rate, accounting for a baseline 2021 estimate.
“To ensure the estimate was conservative, (it) included a one-year income stagnation in the event of a slowing economy,” the release said.
The estimates also accounted for $230 million of the new revenue being used for property tax relief and child tax credits which are part of Pritzker’s plan. It also assumed 6 percent of the new revenues would go to the local government distributive fund which has been shorted in recent years.
Per the plan, different margins of income would be taxed from 4.75 percent to 7.85 percent for those earning $1 million or less, while those earning more than $1 million would pay a rate of 7.95 percent on all income.
To account for the large tax spike at $1 million, the release said, “the team assumed that 10 percent of filers with net income more than $1 million and less than $2 million would try to capture a lower marginal rate.”
Pritzker’s tax team includes Deputy Gov. Dan Hynes, who served as the state’s comptroller for 12 years; Department of Revenue Director David Harris, a former Republican lawmaker who served on revenue and appropriations committees; GOMB Director Alexis Sturm, who has worked in government finance for more than 20 years; and GOMB Chief of Staff Cameron Mock, who has worked in government finance for nearly a decade.