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Questions Swell Over Graduated Tax as State Treasurer Abruptly Cancels Press Conference

NBC Chicago logo NBC Chicago 10/7/2020
Mike Frerichs wearing a suit and tie © Provided by NBC Chicago

With Election Day less than one month away, a new controversy surrounds one of the biggest issues on Illinois' ballot.

Voters are set to decided if the state will change from a flat income tax to a graduated income tax, a move opponents say could provide an opening to tax retirement income. The amendment would change the state’s mandated flat-rate income tax to a graduated-rate tax with rates that increase along with income.

The confusion comes after comments made by State Treasurer Michael Frerichs in June about the potential for a tax on retirement income.

At the time, Frerichs told the Daily Herald "one thing a progressive tax would do is make clear you can have graduated rates when you are taxing retirement incomes."

Frerichs, who has since walked back his statement, had been scheduled to address his "misleading" comments in a press conference Tuesday, in which he aimed to "reassure senior citizens that the proposal will not tax retirement income." That appearance was abruptly canceled just 10 minutes before it was set to begin.

Illinois currently does not tax retirement income.

The Illinois Policy Institute contends in the lawsuit filed in Cook County Circuit Court that the explanation of the amendment on the ballot for voter approval is misleading and needs court-ordered clarification.

The Illinois General Assembly in May approved the language in the proposed amendment that is atop the Nov. 3 ballot that explains the pros and cons of adding a graduated rate to the income tax system. The lawsuit contends misleading statements in the ballot explanation and pamphlet are dangerous to retirees.

"Right now it's being sold as a fair tax because it's being sold as a tax on the rich," said former vice president of policy for the Illinois Policy Institute Ted Dabrowski. "But since Illinois won't reform anything, it's only a matter of time before Gov. Pritzker and the legislature, without reforms, will come after the middle class and the tax hikes that are needed to fix the state are massive."

Vote Yes for Fairness chairman Quentin Fulks said the lawsuit is an attempt by an organization bankrolled by the wealthiest people in the state to ensure the burden remains on middle- and working-class families while millionaires and billionaires avoid paying their fair share.

“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,” Fulks said in a statement.

Gov. J.B. Pritzker has spent more than $56 million of his own fortune to promote the tax while billionaire Ken Griffin has tossed in $46 million in ads saying the tax is the wrong idea.

"Rich people have never paid their taxes," said Rev. Jeannette Wilson, who was part of a group of faith leaders supporting the tax as they voted early Tuesday.

Speculation swirled over why Frerichs suddenly canceled his Tuesday appearance, but it appears Pritzker may have played a role.

"Earlier today, Gov. 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" Illinois Republican Party Chairman Tim Schneider said in a statement.

A spokesperson for the governor's office did not deny Pritzker's involvement in the decision.

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