The plan would tax income under $1 million at whatever rate was in place, currently 5 percent but scheduled to drop next year. Income beyond that threshold would be taxed at a rate 3 percentage points higher, or 8 percent under the current policy.
Madigan says raising taxes on millionaires would enable the state to give $1 billion more toward schools.
Madigan spokesman Steve Brown said the proposal is not predicated on the temporary tax rate of 5 percent remaining the same for those earning less than $1 million. The temporary rate is scheduled to drop to 3.75 percent in 2015.
But a chart provided to reporters by the Speaker’s Office comparing the tax rate in neighboring states for incomes over $1 million assumes a 5 percent tax rate, not the 3.75 percent tax rate scheduled for 2015, noted David From, Illinois director for Americans for Prosperity.
“This is part of an ongoing effort to create class warfare and demonize job creators and the wealthy,” he said “I take this proposal very seriously.”
The Illinois Constitution would need to be amended for the proposal to become law. That would require a 60 percent majority of both legislative chambers voting to place it on the November ballot and voters approving the measure.
“This plan brings long overdue fairness to the state tax structure and provides a needed boost to education funding to help give our children more of the resources they need to succeed,” Madigan said in a prepared statement.
But the proposal was not so warmly received by Republicans.
“Illinois Democrats’ answer to everything continues to be taking more money out of taxpayers’ pockets,” said Senate GOP Leader Christine Radogno. “In the same day, they are talking about a progressive income tax that raises taxes on just about every taxpayer and a surcharge tax that raises taxes on certain taxpayers – including farmers and small businesses.
“They’ve proposed a soda tax and a job tax.
“It’s an approach that hasn’t worked well for Illinois. Their 67% income tax increase is taking an additional week’s pay out of everyone’s pockets. They promised it would pay off the state’s bills. It didn’t. They promised it would improve our credit rating. It didn’t. They promised they would balance the budget. They didn’t.”
Others expressed concerns that the tax hike on those earning $1 million or more would hurt the state’s economy.
“I’d be scared that if it did pass and went into place that we would lose more job creators and our unemployment would be driven up,” said state Rep. Joe Sosnowski, R-Rockford.
State Rep. Dwight Kay, R-Glen Carbon, was equally dire.
“I think it is impractical, sends the wrong message. It threatens jobs, it threatens the very thing we need the most, and that is a strong economic base that knows what the plan is for the next 10 years,” he said. “I predict that you will see a mass exodus of large, intermediate and small businesses. There’s no doubt in my mind.”