(The Center Square) – A group of Illinois’ progressive lawmakers is pushing to create new revenue for people with disabilities and the elderly by increasing the state’s estate tax to the highest in the nation.
State Rep. Barbara Hernandez, D-Aurora, and others in the House Progressive Caucus could see their House Bill 3920 heard in the Revenue and Finance Committee as soon as Thursday.
If enacted, it would send monthly payments to people with disabilities worth “1/12 of the applicable annual federal poverty level for the individual's family size minus the amount of the individual's monthly federal SSI benefit.”
Those payments would extend to undocumented immigrants who have a disability and otherwise qualify and the extra benefits wouldn’t count against any other means tests for other benefits.
The state would pay for the program by adding an additional 5% to Illinois' estate tax brackets, which currently range from 0.8 to 16 percent for estates valued at over $4 million.
“The top marginal estate tax rate under this proposal would become the highest in the country at 21%,” Tax Foundation analyst Katherine Loughead said.
Illinois is one of 12 states that tax the total value of an estate at the time of the owner’s death. Any estate value over $4 million would be subject to Illinois’ estate tax.
The tax has been the target of criticism from the business groups and the Illinois Farm Bureau because estates of small business owners including farmers can be rich in assets but poor in cash. Between the market value of land, buildings, livestock, and machinery, a farm operation of relatively modest means can quickly qualify for Illinois’ estate tax provision.
Illinois Attorney General Kwame Raoul, who is tasked with collecting estate taxes, brought in more than $315 million in 2018. In 2019, his office collected $329 million.
Loughead said most states with an estate tax have been slowly phasing them out since 2001. The Tax Cuts and Jobs Act of 2017 doubled the estate tax threshold through 2025.
“Just a few decades ago, almost every state had either an estate tax or inheritance tax,” she said. “Now, most states have done away with those.”