SPRINGFIELD — House Speaker Michael Madigan's plan to make millionaires pay higher income taxes advanced in the Illinois House Thursday.

A day after Gov. Pat Quinn called on lawmakers to extend the state's temporary income tax as a way to avoid deep cuts in state services, the Democrat-controlled House Revenue Committee signed off on the millionaire tax on a party line vote of 6-4.

Not only would the plan bring in as much as $1 billion for cash-strapped schools, but it plays into an election-year theme for Democrats, who are working to keep wealthy Republican businessman Bruce Rauner out of the governor's office.

Asked why he picked $1 million as the threshold for the added tax, Madigan said, "It seemed like a nice number."

He said the proposal was not an attempt to annoy Rauner, who reported earning $53 million in 2013 and spent $6 million of his own cash in his victorious GOP primary race.

"I'm not in the business of annoying anybody, including the media," Madigan said.

Moments after endorsing Madigan's tax plan, the panel dumped a proposed constitutional amendment that would have given voters the chance to weigh in on plan to replace Illinois' flat income tax rate with a graduated income tax rate.

The defeat of the so-called "Fair Tax" referendum came as hundreds of supporters rallied in the Capitol Rotunda for its passage. Its defeat sent a signal to the Senate that a graduated tax proposal moving through that chamber won't be taken up in the House this spring.

Madigan later told reporters the added 3 percent tax on income of more than $1 million wouldn't solve the state's school funding woes.

"We'll still struggle with a budget for the state of Illinois because there will be a great loss of revenue unless we extend the increase in the income tax," Madigan told reporters.

Business groups opposed both measures, saying Illinois should keep its flat tax rate, which currently stands at 5 percent but will drop to 3.75 percent on Jan. 1 unless lawmakers go along with Quinn's request.

"My concern is that this could kill small businesses," said state Rep. David McSweeney, R-Barrington.

Business groups said a tax on wealthy Illinoisans would discourage entrepreneurs from setting up shop in Illinois.

"It's the perception that Illinois wants to penalize success," Illinois Manufacturing Association chief Greg Baise said. "We find it not the right way to go."

State Rep. John Bradley, D-Marion, said the proposal would help schools in his southern Illinois district without affecting many people.

"I don't have too many folks down there making $1 million," Bradley said.

State Rep. Brandon Phelps, D-Harrisburg, said he was leaning toward voting "yes" on the measure.

"It definitely has a chance, and I think it will pass," Phelps said. "They're going to try to get extra money for schools."

Its prospects were less certain in the Senate.

State Sen. Mike Jacobs, D-East Moline, said he is wary of the class warfare that is heating up between Democrats and Rauner.

"I realize people support the millionaire's tax. I think most people support it because most people aren't millionaires, but if we drive the millionaires out of Illinois, is that a good idea?" Jacobs asked. "I just don't want to send the wrong message to people who are trying to make a living in Illinois and providing jobs, that we should tax them out of existence."

State Sen. Gary Forby, D-Benton, said he doesn't know if the millionaire tax has enough momentum to move through the Senate.

"I'm not sure there's enough votes for something like that," he said. "Right now, I would say no. We want to make sure we don't drive businesses off."

The legislation is House Joint Resolution Constitutional Amendment 51.

(2) comments

snowman05

They need to tax, taxes. That will fix it.

Klaatu
Klaatu

Remember when that "temporary" tax increase was going to reduce the state debt and pay the bills? Then the democrats got busy with new spending and we are no better off now than before. They simply found more places to spend, just as I and many others predicted. The millionaire tax wouldn't impact me, but I can see the state losing on this when people start packing up and leaving for states with a better tax environment. The entire economic house is collapsing. We simply aren't going to be able to tax our way out of this. It will create a downward spiral that will never stop until the "elevator" gets to the basement. I rue the day I decided to build a house on the Illinois side of the river.

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