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ALTHOUGH THE ILLINOIS voters elected to abolish the personal property tax as to individuals at an election held last fall, the Illinois Supreme Court in an opinion filed July 9, 1971, upset the result of that election (Lake Shore Auto Parts Co. v. Korzen Case, Nos. 44199, 44308, 44432 Cons.). The people at such election had approved a new Article to the Illinois Constitution of 1870 to abolish the personal property tax on individuals. However, the Court, in its decision, determined that the new Article was discriminatory because it classified personal property for the purpose of imposing a property tax by valuation, upon a basis that does not depend upon any of the characteristics of the property that is taxed, or upon the use to which it is put, but solely upon the ownership of the property. The Court further stated that although the equal protection clause of the fourteenth amendment to Federal Constitution does not prohibit classification, a State may not, under the guise of classification, arbitrarily discriminate against one and in favor of another similarly situated. People in Illinois question this decision, because they cannot understand how the Court can over-turn their over-whelming decision last fall of approving an amendment abolishing the personal property tax on individuals. Members of the Illinois General Assembly are hearing from their constitutients, and it appears at this writing that the Legislature will consider the problem when it meets this fall. The question is often asked: "What can the Legislature do?" The new State Constitution, Article IX, Section 5(c), provides that the General Assembly shall abolish the personal property tax on an ad valorem basis by January 1, 1979, and it shall replace all revenue lost by units of local government as a result of the abolition of personal property taxes subsequent to January 2, 1971, by imposing statewide taxes, other than ad valorem taxes on real estate, solely on those classes relieved of the burden of paying personal property taxes because of the abolishment of such taxes subsequent to January 2, 1971. Simply stated, if the General Assembly goes this route, it would be charged with the duty of levying a statewide tax or taxes to make up revenues lost to local governments. The safest thing to do would be to abolish all personal property taxes on both individuals and business, but the problem is what taxes shall be levied to make up the lost revenue. Another provision of the new Constitution, Article IX, Section 5 (a), provides that the Legislature may classify personal property taxes for the purposes of taxation by valuation, abolish such taxes on any or all classes, and authorize the levy of taxes in lieu of the taxation of personal property by valuation. It is possible under this provision that the General Assembly could enact some form of classification which would have the effect of practically doing what the amendment approved by the voters last fall was intended to do. It is also possible that the Legislature may do nothing under the reasoning that since the effective date of the recently imposed State Income Tax, August 1, 1969, counties and municipalities have received 1/12th of the receipts from such tax on a per capita basis. Further, the common schools have shared in the income tax receipts through the school formula, and state aid claims paid to the common schools jumped tremendously during a period of one year. In school year 1968-69, state aid claims paid to common schools were $369.7 million, while in school year 1969-70, such state aid claims amounted to $601.2 million. Further, counties and municipalities may share their receipts from the State Income Tax with other local governmental units within the county or municipality. However, the voter is expecting something to be done, and the General Assembly has a problem on its lap. In answer to how much money is involved, it is my opinion that the personal property tax which will be collected from the levies made in 1971 (collected in 1972) will break down approximately as follows:
Maurice W. Scott is Executive Vice President, Taxpayer's Federation of Illinois. Illinois Parks and Recreation 9 November/December, 1971 |
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