Pritzker Adds $800 Million a Year in New Taxes to Already High-Tax Illinois

The governor of Illinois, Democrat J.B. Pritzker, the billionaire Hyatt hotel heir who is a possible 2028 presidential candidate, is facing sharp criticism after signing into law a state budget that adds $800 million a year in new taxes to a state already in the worst third of the 50 states when it comes to imposing tax burdens.

Unleash Prosperity, a pro-growth, free-market-oriented group, called Pritzker "a man who never met a tax increase he didn’t embrace." He’s more frugal when it comes to his own money. Pritzker had five toilets ripped out of a second mansion in what Cook County described as a fraudulent scheme to save $330,000 in property taxes.

The Illinois Policy Institute had urged Pritzker to veto the advertising tax on the grounds that "its revenue isn’t needed and it’s sure to be legally challenged." "It’s another ‘Pritzker Two-Step’ budget: increase spending, then raise taxes and sweep dedicated revenues from other funds to fill another big budget gap. This is why Illinois residents pay the highest combined state and local tax rate in the country," wrote Paul Vallas, a senior fellow at the Institute. "Pritzker has presided over at least 63 tax and fee increases."

A senior fellow at the Tax Foundation, Jared Walczak, warns that, "the new tax opens the state up to costly litigation it has a very good chance of losing … the whole thing looks like something dashed off with very little thought." The social media tax "is $6 per user per year, denominated as $0.50 per user per month for large social media platforms, and lesser amounts per user for smaller platforms," he writes. "Illinois plans to impose a complicated, legally fraught new tax based on a few pages of confused, contradictory, and almost laughably incomplete legislative text embedded in the new budget."

An editorial in the Washington Post is headlined "Pritzker’s social-media-tax belly flop." Said the Post, "He’s preparing to run for president in 2028 and apparently believes that antagonizing successful businesses will play well with the liberal base. But voters tend to notice incompetence." It notes that the digital ad tax "is designed to extract huge sums from Google, Meta and Amazon, whose executive chairman Jeff Bezos owns The Post."

The Post concluded, "Ultimately, the biggest losers might be the people who actually use social media. Rather than just swallow the tax, companies may need to consider charging for subscriptions, erecting tiered paywalls and raising the rates for advertising. That will disadvantage small businesses who depend on social media to get out the word about their products. It might even mean some smaller platforms cease operations in Illinois."

A client memo from accounting firm PWC gives details on the legislation, which goes into effect January 1, 2027. It "imposes a new tax on providers of targeted advertising services at a rate of 10% of the gross receipts derived from these services provided in Illinois, whose receipts exceed $1 million during the preceding 12-month period, determined quarterly." It also "establishes a monthly social media platform fee for platforms with more than 100,000 Illinois users from whom the platform collects data, and requires a report of average monthly Illinois users to the Secretary of State within 14 days after the start of each month." It also "applies a new privilege tax at the rate of 0.2% of the value of digital asset business activity received by Illinois customers collected by digital asset brokers who maintain a place of business in Illinois, including remote brokers meeting a $100,000 Illinois gross receipts threshold."

Pritzker, on social media, hailed it as a "budget for Illinois’ future." Maybe, if that future consists of litigation and punishing successful technological innovation. The news article that Pritzker linked to included a quote from the Republican leader in the Illinois state Senate, John Curran, who said the budget "does nothing to address the structural deficits that directly result in Illinois being a bottom-six state in both economic growth and job opportunities under Gov. Pritzker."

If Pritzker runs for president, his campaign might have to pay more for advertising and social media because of his own actions. He is a billionaire member of a family whose fortune, stemming from the Hyatt hotel chain, is estimated by Bloomberg at $65.6 billion; his sister, Penny Pritzker, was President Obama’s Commerce Secretary and is senior fellow—effectively the chair—of the Harvard Corporation, the more powerful of the university’s two governing boards. Pritzker can probably afford it. If his campaign prefers to avoid it, though, perhaps it will decide to do what other Illinois residents and businesses—the Chicago Bears football team, which is moving to Indiana; Citadel, which moved to the Free State of Florida along with its founder and CEO Ken Griffin; Boeing, which moved to Virginia; and Caterpillar, which moved to Texas—tired of the taxes, crime, and regulation have done: set up shop somewhere else.

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