CHICAGO – The biggest permanent property tax relief plan in Illinois history coupled with a supplemental infusion of cash to Illinois’ school districts is the cornerstone of an amendment to the Illinois Constitution unveiled today by Lieutenant Governor Pat Quinn.
Under Quinn’s “Taxpayer Action Amendment”, each of 2,759,648 Illinois homeowners will receive an annual rebate check of at least $208 on July 1 of every year, with a similar amount issued every July 1 thereafter. Altogether, more than $575 million in new property tax relief will be delivered annually to hard-pressed homeowners.
Also on July 1 of every year, Illinois’ 896 elementary and secondary public school districts will receive $575 million in supplementary aid which amounts to about $277 for each of the state’s 2,071,391 students.
“The Taxpayer Action Amendment is a fair and simple method to deliver substantial property tax relief permanently to more than 2.7 million Illinois homeowners,” Quinn said. “We need to restore fundamental fairness to the Illinois tax code and deliver guaranteed property tax relief to the people who need it most – the hard-working, bill-paying taxpayers of Illinois.”
And noting Illinois’ current unemployment rate is up to 7.1 percent, Quinn argued the best way to jumpstart the economy and grow jobs is to put money in the pockets of consumers.
If approved by 60% of the voters in the November 2, 2004 election, the Taxpayer Action Amendment would amend the Education Article of the Illinois Constitution to impose a 3 percent surtax on the adjusted gross income of individuals reporting in excess of one-quarter million dollars ($250,000) a year.
According to the most recent Illinois Department of Revenue statistics, 81,343 taxpayers of the state’s 5,675,846 income taxpayers filed returns showing income in excess of $250,000 in 2001. Only 1.4 percent of the state’s taxpayers would be affected by the surtax. The income taxes of the other 98.6 percent of Illinois taxpayers would not be affected.
The surtax revenue - roughly $1.15 billion - will go into a new constitutionally established “Education and Permanent Property Tax Relief Trust Fund”, half of which would be distributed annually in equal amounts to every taxpayer who is an owner-occupier of residential property. The other half would be distributed equally on a per-student basis to school districts providing elementary and secondary education.
Quinn also released a study showing that Illinois has the most unfair tax code in the Midwest and that millionaires in Illinois are taxed much less than in other states.
In Illinois, the incomes of millionaires are taxed at 3%, the lowest tax rate on millionaires in the Midwest. In Iowa, for example, the tax rate on millionaires is 8.98 percent. Illinois tax rate on millionaires - as well as anyone reporting income over $250,000 - is less than half the Midwest average of 6.27 percent.
Quinn’s study shows the following income tax rates on millionaires and those reporting more than $250,000 in income: Iowa (8.98%), Minnesota (8.0%), Ohio (7.22%), Wisconsin (6.75%), Kentucky (6.0%), Missouri (6.0%), Michigan (4.2%), Indiana (3.4%) and Illinois (3.0%).
“The Taxpayer Action Amendment follows a principle as old as the Bible - taxes should be based on ability to pay,” Quinn said. “For too long, Illinois’ unfair tax laws have protected a few thousand millionaires at the expense of millions of wage-earners who live from paycheck to paycheck.”
“Unemployment is up and people are finding it harder to pay for basics,” Quinn said. “The Taxpayer Action Amendment puts purchasing power in the pockets of 2.7 million Illinois residents every July 1 to help with groceries, utility bills or back-to-school clothes and supplies for their kids.”
“Forty years ago, President John F. Kennedy said a rising tide lifts all boats, but he didn’t say a rising tide should lift only yachts,” Quinn said. “While the wealthiest 1.4 percent of Illinois taxpayers will pay higher income taxes, the other 98.4 percent of taxpayers - 5,594,503 in all - will see annual property tax rebate checks, better-funded schools, a more vigorous economy and no tax increase whatsoever.”
And according to Illinois Department of Revenue statistics, these 1.4% of the state’s wealthiest individuals account for nearly one-quarter of the state’s total reported income.
“There’s something very wrong with the current Illinois tax code when millionaires are lightly taxed, while everyday people who get up early in the morning, work hard and come home bone-tired are overtaxed,” Quinn said.
The Taxpayer Action Amendment would also represent the biggest infusion of supplemental funding for state schools in years. The state’s portion of school funding has dipped consistently ever since the new 1970 Constitution gave the state “primary responsibility for financing the system of public education.” From a high-water level of 48 percent in 1975, the state now covers only a third of the cost of educating Illinois’ students, shifting the burden to property taxpayers and creating savage inequalities in funding between school districts.
“In this world there are movers and shakers, and then there are those who are moved and shaken, and the difference is education,” Quinn said. “Jobs follow brain power and Illinois must invest in top quality education to keep quality jobs in the 21st Century.”
In 2001-02, 2,071,391 students attended Illinois public elementary and secondary schools. There are 896 school districts in Illinois. Of those, 100 districts were on the Illinois State Board of Education’s “Financial Watch List” (the most severe fiscal rating) and another 183 on the “Early Financial Warning List”.
The General Assembly - by 60 percent votes in both chambers - must act by May 2, 2004, to place it before the voters in the November 2, 2004, general election.
The Governor’s signature is not required to place this on the ballot.
If 60 percent of those voting on the question approve it, it becomes part of our state constitution immediately. The 3 percent surtax - which would be levied only on adjusted gross income over $250,000 - would begin on January 1, 2005, and the first checks to school districts and homeowners would go out on July 1, 2005.
“The Taxpayer Action Amendment gives the voters a once-in-a-lifetime chance to reform Illinois’ unfair tax system at the ballot box,” Quinn said. “It’s time to let the taxpayers of Illinois - after a third of a century of poorly-funded schools and unfair taxes - amend our Constitution to get things right.”
Quinn has also organized successful statewide referendums which led to the end of the century-old practice of legislators receiving their entire year’s pay in advance and creation of the Citizens Utility Board (CUB), which has saved consumers billions in utility rate reductions.
Quinn served as Commissioner of the Cook County Board of (Property Tax) Appeals (1982-86), the nation’s largest property tax appeal agency, where he heard more than 150,000 cases. He is author of a leading book on the Illinois property tax system – “How To Appeal Your Property Taxes Without a Lawyer” and has taught property tax law at Chicago Kent Law School since 1984. Quinn served as Illinois State Treasurer from 1991 to 1995, and was elected Lieutenant Governor in November, 2002.