The Illinois Manufacturers’ Association testified in opposition to a proposed constitutional amendment that would impose a 3 percent income tax surcharge on high earners, according to an April 21 statement from its president and CEO, Mark Denzler.
“The Illinois Manufacturers’ Association testified in opposition this afternoon on a proposal from State Rep. LaShawn Ford that would impose a new 3 percent ‘income tax surcharge’ on individuals and small businesses earning more than $1 million,” Denzler wrote in an April 21 social media post on X. “The proposal calls for the $3 billion in new tax revenue to be spent on education and property tax relief. While laudable to help fund schools and provide much-needed property tax relief, this proposed Constitutional Amendment has numerous flaws.”
The proposal, introduced as a constitutional amendment in the Illinois General Assembly, would require voter approval and would add a 3 percent tax on the portion of individual income exceeding $1 million annually. The proposal would apply the surcharge to individuals and small businesses, generating an estimated $3 billion annually for education funding and property tax relief.
Denzler said the measure could negatively affect businesses across the state, particularly pass-through entities such as Subchapter S corporations and limited liability companies that are taxed at the individual rate. According to the association, about 22,000 small and mid-sized businesses would be impacted, many of which reinvest earnings back into operations.
The group also raised concerns about how the proposed revenue would be distributed. While businesses would pay higher income taxes under the plan, Denzler said the sponsor indicated that property tax relief would be directed exclusively to residential property owners, leaving employers without relief despite facing some of the highest property tax rates in the country.
The association further pointed to constitutional constraints governing Illinois’ tax structure, noting the current 8-to-5 ratio between corporate and individual income tax rates. If enacted, the individual rate would rise from 4.95 percent to 7.95 percent—a 61 percent increase—potentially allowing lawmakers to raise the corporate rate to as high as 12.7 percent to maintain that ratio.
Denzler also warned that the proposal lacks a dedicated funding safeguard, or “lockbox,” to ensure that the projected $3 billion in new revenue is used exclusively for education and property tax relief. Without such protections, he said, lawmakers could redirect the funds to other spending priorities.
“Illinois voters defeated a graduated income tax several years ago. We encourage lawmakers to vote No,” Denzler added.
