Libertarian Group Sues Over 'Biased' 'Fair Tax' Ballot Language

ILLINOIS — A libertarian-leaning think tank aligned with the Illinois GOP has filed suit against Gov. J.B. Pritzker's "Fair Tax" ballot initiative, set to go before voters next month.

The ballot initiative will ask voters to approve a change to the state constitution, allowing lawmakers to set a graduated income tax rather than the flat tax that currently exists. But the Illinois Policy Institute argues the language of the ballot initiative and official pamphlets explaining it are biased and misleading. It wants a correction sent to voters before they decide on the issue next month.

Specifically, the group takes issue with this line from the legally-required pamphlet explaining the proposed changes to the state constitution: "This amendment does not tax retirement income."

While that's true — it doesn't — the group says the amendment will pave the way for another law that could raise taxes on retirement income, pointing to statements from Democratic officials and the Chicago Sun-Times' editorial board making the case for taxing the state's highest retirement incomes.

The state could tax retirement income currently, but it would have to do so with a flat tax on all retirement income.

"Progressive tax powers make it inherently easier to raise taxes, because lawmakers do not have to worry about facing backlash from all taxpayers at once," the Illinois Policy Institute claims. "This amendment would enable Springfield to begin taxing retirement income above a certain level, but then gradually lower the exemption threshold to raise additional revenue, slowly adding more Social Security and pension income to the tax base."

The AARP, an advocacy group that promotes issues affecting Americans over 50, nonetheless said it supports the proposed tax amendment and pushed back against arguments that it will tax retirement income.

"AARP supports the current graduated income tax proposals which, in no way, taxes retirement income or makes it any easier to implement a tax on retirement income," according to a statement issued by the group. "AARP Illinois continues to oppose taxing retirement income and will fight any efforts to do so."

The lawsuit also claims the ballot language voters will see is misleading. Rather than the amendment giving "the state the ability to impose higher tax rates on those with higher income levels and lower income tax rates on those with middle- or lower-income levels," as the ballot language reads, the suit says it "merely gives the state the authority to impose different tax rates on those with different income levels."

That's accurate, but whether the language as written is misleading will be up to the courts.

The amendment won't directly set tax rates but rather give lawmakers the power to do so. While it doesn't explicitly require a progressive income tax rate, according to a bill already approved by the Illinois General Assembly, 97 percent of Illinoisans would see a tax cut as a result. But nothing in the amendment itself ensures lawmakers won't raise taxes on lower- or middle-income Illinoisans in the future, nor does it prevent them from levying more than one income tax on an individual.

Here's the complete ballot language voters will see:

The proposed amendment grants the State authority to impose higher income tax rates on higher income levels, which is how the federal government and a majority of other states do it. The amendment would remove the portion of the Revenue Article of the Illinois Constitution that is sometimes referred to as the “flat tax,” that requires all taxes on income to be at the same rate. The amendment does not itself change tax rates. It gives the State the ability to impose higher tax rates on those with higher income levels and lower income tax rates on those with middle or lower income levels. You are asked to decide whether the proposed amendment should become a part of the Illinois Constitution.

According to the Illinois Policy Institute, "lawmakers would have the ability to change these rates at any time and however they see fit with a simple majority vote."

That's a sentiment shared by Republican opponents of the proposal.

"J.B. Pritzker's the governor today," Republican Dale Righter said in April 2019. "But there'll be someone else in office. This leaves the door wide open to anything, including a system of taxation that taxes different types of income at different rates."

Democratic Treasurer Michael Frerichs — at the last minute — canceled a news conference scheduled for Tuesday where had been expected to address the graduated income tax proposal.

He did not explain why the news conference was canceled, but issued a statement opposing the creation of a retirement tax in Illinois.

"I encourage others to join me to stand up for working families and retirees, so they get a tax cut while we ask millionaires and billionaires to pay their fair share," Frerichs said. "The fact is opponents of the fair tax have actually released plans to tax retirement income and raise taxes on everyone."

In June, he told the Daily Herald something different. "One thing a progressive tax would do is make clear you can have graduated rates when you are taxing retirement income," Frerichs said then. "And, I think that's something that's worth discussion."

Illinois Republican Party Chairman Tim Schneider claimed Tuesday that Gov. Pritzker forced Frerichs to call off the news conference.

"Earlier today, Governor Pritzker put the muzzle on Treasurer Frerichs who was minutes away from telling the people of Illinois the truth: Pritzker has a plan to tax retirement income in Illinois and needs the constitutional amendment to get it done," Schneider said in a statement. "Pritzker can muzzle Frerichs all he wants but the secret is already out. To protect retirement income from Pritzker’s tax plan, Illinois voters must vote no on the constitutional amendment."

Proponents of the tax amendment called the Illinois Policy Institute's lawsuit "frivolous" and an attention-seeking "stunt."

"When the facts aren't on your side, you're forced to rely on blatant stunts and outright lies, and that's exactly what we're seeing from the Illinois Policy Institute Today," said Quentin Fulks, of Vote Yes for Fairness, a group backed by Pritzker.

The amendment has been endorsed by prominent labor groups such as the Illinois AFL-CIO, SEIU Illinois State Council, Associated Fire Fighters of Illinois and Chicago Teachers Union, as well as the AARP, League of Women Voters of Illinois, Planned Parenthood Illinois Action, Sierra Club Illinois and the Chicago Jobs Council, according to Ballotpedia.

Prominent opponents include hedge fund manager Kenneth Griffin, listed by Forbes as Illinois' richest person, former Illinois Manufacturers Association President Greg Baise, the Illinois Farm Bureau and Illinois Chamber of Commerce.

Election Day is Tuesday, Nov. 3. The deadline to register online to vote in Illinois is Sunday, October 18, and the last day to request a ballot by mail is Thursday, October 29. Early voting is underway and runs through Nov. 2. You can also register to vote on Election Day. Check with your local election authority to find out which locations offer same-day registration.

Read More:

• Illinois Mail-In Voting: How To Get A Ballot, Drop Box Locations
• Illinois Voters Asked To Decide 'Fair Tax': What You Need To Know
• State Income Tax Constitutional Amendment Passes Senate Committee
• How Much Would You Pay In Illinois Income Tax Under Pritzker Plan
• Progressive Income Tax Constitutional Amendment Headed To Ballot