Pritzker’s progressive tax plan could cost him up to $1.67 million extra

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ILLINOIS (WCIA) — Under the tax brackets proposed by the House and Senate last month, Governor J.B. Pritzker, a billionaire three times over, could have to pay up to an estimated $1.67 million more in state income taxes if Illinois voters approve a progressive tax at the ballot box in 2020.

That figure is based on how much he reported earning in 2017, and could change drastically depending on how he structures his wealth in the future. Pritzker has stated he put his personal wealth in a blind trust, and has vowed to turn a blind eye to the holdings in his family trusts, which are structured as tax shelters and located offshore in the Bahamas.

Pritzker, who Forbes Magazine declared is now the richest politician in America, reported earning $54,990,735 in taxable income in 2017. Because he split his state income tax between several states, he only paid $812,000 to Illinois, which is approximately 1.48 percent of his reported income from that year.

Two years prior, Pritzker, a venture capitalist by trade, paid no income tax to the state of Illinois. At the time, his campaign said that among other financial strategies, some of his investments qualified as tax write-offs against his income. That example demonstrates how the wealthiest people in the state don’t necessarily have to physically move out of Illinois to avoid paying a higher income tax, they only have to move their money out of the reach of the grasp of the state’s tax man.

How much you would pay

The state’s flat income tax jumped from 3.75 percent up to 4.95 percent halfway through 2017. By 2021, people in the top tax bracket who earn north of $750,000 (or joint filers who make more than a million dollars combined) would see their taxes skyrocket up to 7.99 percent. At a minimum, the jump would amount to an increase of $31,800 in state income taxes — more than double what it was in 2017.

Under the graduated rate structure, people working part-time or seasonal shifts earning between $0-$10,000 would pay an income tax rate of 4.75 percent.

Most full time employees earn between $10,001-$100,000 and would fit into the second category at a rate of 4.90 percent, just a fraction below the current flat tax rate.

The third tax bracket would continue to collect an income tax rate of 4.95 percent from people who make between $100,001-$250,000. Everyone in those three categories would qualify for additional tax benefits if they own a home or have children living at home.

Anyone who makes above $250,000 (or joint filers who make a combined $500,000 annually) would not be able to claim tax relief for their children or write off their property taxes against their income.

On the campaign trail, and over the course of his first five months in office, Pritzker has repeatedly argued his progressive tax structure would provide tax relief for “the middle class and those striving to get there.”

The total tax burden

However, that relief is so insignificant, most Illinois taxpayers will see it washed away in a flood of other new taxes and fee hikes his administration supported during an aggressive legislative session.

For example, a recent college graduate who lives alone and earns $62,000 annually would pay $45 less to the state per year — less than one dollar per week in savings. Considering the average Illinois commuter will pay an extra $124 in higher gas taxes, that person would see a net increase of $79.

Roughly one in six people in Illinois smoke cigarettes. The state just moved to raise the tax on cigarettes from $0.98 up to $1.98 per pack.

A family of five living on a farm could see a net annual savings of $2 if they earned a household income of $75,000, paid $4,200 in property taxes, and had one smoker living in the home.

Under another scenario, a single mother who makes the state average of $78,000 as a nurse to provide for two children could save a net of roughly $34 per year under the new progressive income tax plan — enough to give each kid an allowance of $0.32 per week.

A state lawmaker who works as an attorney on the side and earns a combined total of $210,000 annually with a spouse who makes $80,000, perhaps as a consultant, would pay an extra $865 in income taxes, assuming they lived in a $450,000 home.

These hypothetical scenarios only represent a few of many thousands of possible circumstances, but they paint a preliminary picture of how this income tax plan is skewed far more heavily toward raising taxes than offering relief.

The upside: paying pensions

The governor has said next year’s ballot question is “a vote on improving the arc of our state’s finances forever.” He says the extra revenue the state could collect under a progressive system could help to pay down the state’s ballooning pension debt — a growing obligation that continually eats away at available revenue lawmakers can spend on more immediate state needs.

The Pritzker administration published a tax calculator on the state’s government website that allows tax filers to enter their personal information to estimate how much they could pay under the new model. That calculator only takes into account the income taxes, and does not provide for other added costs under other new taxes.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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