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Secret IRS data shows the $54 million Illinois billionaire Ken Griffin spent fighting a tax increase really paid off
Ken Griffin Spent $54 Million Fighting a Tax Increase for the Rich. Secret IRS Data Shows It Paid Off for Him.
by Paul Kiel and Mick Dumke
ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.
Series: The Secret IRS Files
Inside the Tax Records of the .001%
For billionaire Ken Griffin, it was well worth spending $54 million to ensure he and other rich Illinoisans wouldn’t have to pay more tax.
By the time Illinois voters streamed into voting booths on Election Day in 2020, Griffin, then Illinois’ wealthiest resident, had made sure they’d heard plenty about why they should not vote to raise taxes on him and the state’s other rich people. His tens of millions paid for an unrelenting stream of ads and flyers against an initiative on that year’s ballot, which would have allowed Illinois lawmakers to join 32 other states in setting higher tax rates for the wealthy than for everyone else.
In the end, Griffin spent about $18 for every one of the 3.1 million votes against the initiative. After initial optimism about its prospects, the measure came up hundreds of thousands of votes short and went down to defeat.
Rarely does the public get a clear view of the payoff for wealthy Americans who put their money down to achieve a political outcome. But in this case, ProPublica’s trove of IRS data can provide crucial context for the ballot fight. For Griffin and many of his fellow ultrawealthy Illinoisans, spending even such a vast amount was well worth it when compared with what a tax hike might have cost them.
According to the data, Griffin averaged an annual income of $1.7 billion from 2013 to 2018. That was the fourth-highest in the country, behind only the likes of Bill Gates.
Using that average income as a guideline, the new state tax increase, which aimed to raise the rate from 5% to 8% on the highest incomes, would have cost Griffin around $51 million every year in extra tax. In especially good years — in 2018, Griffin reported income of almost $2.9 billion — he might have been forced to pay more than $80 million more.
A Citadel spokesperson responding on Griffin’s behalf pointed out that, according to ProPublica’s previously published data, Griffin paid the second-highest amount of taxes of any American from 2013 to 2018. “Over the past decade,” he said in a statement, “it is almost a certainty that Ken has been the largest individual taxpayer in the State of Illinois — a state notorious for profligate spending and rampant corruption.” Griffin has said he’s not against raising taxes; he opposed the measure, he added in his statement, because “Illinois needs to put its fiscal house in order before burdening hard-working families with yet more taxes.”
The state’s current flat tax rate of 5% is far below the top rates in other large states run by Democrats like California and New York and comparable to those in some Republican-led states like Utah. Advocates for raising the rates on the wealthy in Illinois say the state needs additional revenue, pointing to its regular budget deficits and deep pension debts.
Not all Griffin’s political bets pay off. A candidate for Illinois governor he supported with tens of millions of dollars went down to defeat in June’s Republican primary. Meanwhile, even though the income tax initiative was defeated, Griffin announced last month that he was moving Citadel’s headquarters to Miami and relocating there himself.
Though no other donor to the anti-tax fight came close to matching the tens of millions that Griffin gave, others made contributions that were more than what most Illinois households earn in a year. ProPublica analyzed the tax data of nine other ultrawealthy supporters of Griffin’s anti-tax campaign. According to our estimate, this group of heirs and business owners, which includes some of the wealthiest people in Illinois, can expect to see a healthy return on their contributions and save millions in taxes over the coming years.
The math behind our estimate is simple: Wealthy Illinoisans will save about 3% of their income, because that was the size of the proposed tax increase on the wealthy. That’s essentially how Illinois’ state income taxes work for Illinois residents. With some adjustments, a state tax rate is applied to the income listed on their federal returns. ProPublica contacted all 10 of the anti-tax donors mentioned in this article and the accompanying chart. None challenged the methodology used to estimate their tax savings.
Richard Uihlein, who along with Griffin has emerged as a conservative megadonor on the national stage, pitched in $100,000 to the anti-tax campaign — for him a modest amount given his average annual income of $492 million in recent years. Through his family foundation, Uihlein has also given millions of dollars to the Illinois Policy Institute, a small-government group that fought the graduated tax plan. Uihlein’s average income would lead to about $15 million of annual tax savings from the defeat of the ballot initiative.
Sam Zell, the real estate mogul known in Chicago for putting together a leveraged buyout of the Tribune Company that preceded its bankruptcy, gave $1.1 million. Based on his recent income, he would save $1.6 million in taxes each year. A spokesperson for Zell declined to comment.
Patrick Ryan made his billions in insurance, and Northwestern University’s football stadium and basketball arena bear his family’s name, thanks to the hundreds of millions he’s given the school. He gave $1 million. His recent income suggests $2.1 million in annual tax savings.
Richard Colburn, whose billionaire family owns the electrical parts maker CED, gave $500,000 to the anti-tax campaign, which would help save him $5.5 million each year in taxes, according to our estimates. In an email message to ProPublica, Colburn said his reasons for opposing the graduated tax were simple: It would have “eaten substantially” into his investment earnings, some of which he passes on to a nonprofit foundation he manages. Like Griffin, he contended the state would not have used the money well.
“Though I enjoy living in the Chicago area, I could save immensely by moving to a lower-tax state, and therefore I ‘invested’ to limit the temptation on me to relocate,” Colburn wrote. “Another element of my ‘investment’ stems from my desire to limit the mis-spending by the State of Illinois that occurs every time Springfield has extra money.” (His full statement is here.)
Donald Wilson, founder of the trading firm DRW, gave $250,000 to the anti-tax campaign. That donation in particular looks modest when weighed against his potential tax savings: Based on Wilson’s average annual income of $114 million, the proposed tax increase would have cost him $3.5 million more every year.
Some of the contributions to the anti-tax campaign came from trusts, special legal entities often used by the wealthy to hide or protect assets, as well as to avoid the estate tax. Richard Stephenson, founder of a chain of for-profit hospitals called Cancer Treatment Centers of America, contributed $300,000 through his Celebrate Life Trust. Stephenson is a longtime Republican donor and such an enthusiast of Ayn Rand’s message of uncompromising self-interest that he was an executive producer on two movies based on the novel “Atlas Shrugged.”
Uihlein, Ryan, Wilson and Stephenson also did not respond to requests for comment.
One $25,000 contribution came from the Philip M. Friedmann Family Charitable Trust. Friedmann made his fortune by selling the greeting card company he co-founded to a private equity firm.
Friedmann’s trust, unlike Stephenson’s, is a personal foundation. That means Friedmann likely received a tax deduction for donating to his own organization, which then used some of the funds to fight an increase in his taxes.
The contribution to the anti-tax campaign by Friedmann’s foundation appears to have violated federal tax law, three nonprofit tax law experts told ProPublica. Personal foundations are prohibited from spending to try to influence legislation, a category that includes contributions to a ballot initiative committee, said Lloyd Hitoshi Mayer, a law professor at Notre Dame. Organizations that break that law are required to pay a penalty of up to 25% of the expenditure in addition to attempting to retrieve the money.
Although this prohibition is spelled out on the IRS’ online guide for private foundations, “smaller family foundations don’t always know the applicable rules,” said Ellen Aprill, a law professor at Loyola Marymount University.
Friedmann did not respond to requests for comment.
Illinois didn’t have an income tax of any kind until 1969, when a deal between GOP Gov. Richard Ogilvie and Democratic Chicago Mayor Richard J. Daley resulted in a flat statewide tax of 2.5% on individuals and 4% on corporations. Some Democrats said the tax disproportionately punished low-income families, and pushed for higher rates on the wealthy. But Republicans and other critics argued for expiration dates or rate limits, warning that otherwise lawmakers would simply keep hiking and expanding income taxes. The following year, a compromise was encoded in the state’s updated constitution. It clarified that the General Assembly had the power to impose an income tax but only “at a non-graduated rate.”
As the state’s fiscal problems grew in the following decades, governors and legislators repeatedly raised the flat tax rate until it was up to 5% on individuals. In 2014, multimillionaire private equity investor Bruce Rauner, a Republican backed by Griffin, was elected governor after promising to slash taxes, and the rate was lowered to 3.75%. But as Rauner fell into a bitter standoff with the Democratic-controlled General Assembly, the state went without a budget for more than two years, leaving it in an even deeper financial hole.
The General Assembly, including some Republicans, voted in 2017 to raise the income tax again, to 4.95% on individuals.
Democrat JB Pritzker, a billionaire investor whose family founded the Hyatt hotel chain, launched his campaign for governor by casting himself as a wealthy man who would fight for the middle class — and for a graduated tax that was less burdensome for low-income families than the flat-rate system. Rauner vowed to stop him. Their 2018 campaigns spent more than $250 million combined, including $22.5 million that Griffin gave to Rauner, before Pritzker won that November.
With the support of a committed and rich governor, a graduated income tax suddenly seemed possible in Illinois.
“That created a bunch of new momentum,” said Ralph Martire, executive director of the Center for Tax and Budget Accountability, a think tank that argued in favor of a graduated income tax. “That was enough political support to really get the grassroots groups working on it.”
Outside of a special convention, both the Illinois House and Senate must sign off on a state constitutional amendment by three-fifths majorities. Voters then need to approve it, either by a clear majority of all voters casting ballots in a general election or a three-fifths majority of those voting on the measure itself.
In 2019 the Senate and then the House each met that threshold, passing a measure that would eliminate the graduated income tax ban if voters approved an amendment. Companion legislation laid out what the new tax schedule would be: Rates would either drop or remain at 4.95% for people reporting income up to $250,000; they would climb from there, to a rate of 7.99% on individuals earning above $750,000 and couples above $1 million. The top rate was within the range of those in other Midwest states with graduated systems — higher than Missouri’s but lower than Iowa’s.
Supporters and opponents then had more than a year to make their cases.
Illinois election laws set some limits on campaign donations and spending. But the rules are riddled with loopholes, and they impose no limits on political committees formed to advocate for or against ballot initiatives like the income tax proposal.
Opponents of the graduated income tax formed at least five different campaign committees that raised nearly $63 million altogether. The best funded, by far, was the Coalition to Stop the Proposed Tax Hike Amendment, which collected almost $60 million, including the $54 million from Griffin. The coalition received most of its remaining money from other billionaires and millionaires, according to state campaign donation records.
On the other side, Pritzker created the Vote Yes for Fairness committee, plowing $58 million of his own fortune to support the “fair tax” campaign. Apart from Pritzker’s donations, the committee received just one $250 contribution, records show.
Griffin also launched other offensives. In October 2020, the Chicago Tribune reported that Griffin had lambasted Pritzker as “a shameless master of personal tax avoidance” in an email to Citadel’s Chicago staff.
The bulk of Pritzker’s wealth ($3.6 billion, according to Forbes) is in trusts, some domestic and some located offshore. Pritzker has said some were set up by his grandfather. As ProPublica reported last year, it was common for 20th century patriarchs to set up trusts that passed fortunes down through the generations free of estate taxes.
Pritzker has released his personal tax returns, but has not provided detailed information about the trusts. For 2020, Pritzker’s office released returns showing $5.1 million in personal income for the governor and his wife, MK The domestic trusts benefiting the governor also paid $16.3 million in Illinois taxes and $69.6 million in federal taxes in 2020, according to Pritzker spokesperson Natalie Edelstein.
ProPublica’s IRS data does not shed light on those trusts. When ProPublica requested further detail, Edelstein said the governor is not releasing documents concerning the trusts because he “is not the only beneficiary, so he does not have authority to release all of the information.” She said that the governor had not personally accepted any disbursements from the offshore trusts, instead giving them to charity. She did not address whether the trusts had been set up to avoid estate taxes, only saying they were “established generations ago.”
At the height of the graduated income tax campaign, advertisements for and against the initiative seemed to be everywhere in Illinois — in mailboxes, online, all over the airwaves.
“You couldn’t even watch TV — it was just one ad after another,” recalled David Merriman, a public administration professor at the University of Illinois Chicago.
Merriman’s research had found that Illinois received less revenue from income taxes and placed a higher tax burden on low-income taxpayers than neighboring states with graduated systems, including states led by Republicans. But, perhaps predictably, the ads largely avoided policy discussions in favor of political appeals.
“At the worst possible time, Springfield politicians are pushing a constitutional amendment that would give them new powers to make it easier to raise taxes on all Illinois taxpayers,” a narrator in one anti-tax ad declared. “And if there’s one thing we know about Springfield politicians, it’s that you can’t trust them.”
The fair-tax campaign accused the rich of trying to fool middle-class families and claimed, based on the state Senate bill that had already passed, that as many as 97% of taxpayers would pay the same or less under the governor’s plan.
But voters weren’t convinced. Federal investigations of several Chicago and state politicians were making headlines, and Merriman said the graduated tax advocates failed to persuade voters that they would benefit from the amendment. The initiative failed by a vote of 53% to 47%.
“It showed just how distrustful everyone is of the government,” he said.
The big money battle has continued in the Illinois governor’s race this year. This January, Pritzker deposited $90 million into his own reelection fund — the largest single political contribution in Illinois in decades and probably ever. Under state election law, candidates can lift donation limits in a race by funding their own campaigns.
Several of the anti-tax funders contributed large sums to Republicans aiming to unseat Pritzker this fall. Once again, Griffin led the way, spending $50 million, but his handpicked candidate lost the GOP primary last week to Darren Bailey, a right-wing state senator propelled by more than $17 million Uihlein gave to his campaign and an aligned super PAC. Pritzker and the Democratic Governors Association also went head-to-head with Griffin, paying for ads attacking his candidate, Richard Irvin.
Bailey received an endorsement from Donald Trump the weekend before the election and finished with about 58% of the vote. Irvin faded to third place with 15%. In his election night victory speech, Bailey ripped Pritzker as an “out-of-touch, elitist billionaire.”
“Do you feel overtaxed?” Bailey called out to his supporters. Their response: “Yeah!”
By then, Griffin had made a big announcement that meant his state tax bill would plummet.
In a letter to Citadel employees, Griffin announced that he was moving the company’s headquarters to Miami and that he himself had already moved his family to the area.
Florida does not have a personal income tax. Experts told ProPublica Griffin will still pay some personal income tax in New York and Illinois since Citadel has offices there. But his bill is sure to shrink dramatically, likely saving him tens of millions a year.
In response to ProPublica’s questions, Citadel did not address whether taxes motivated his move. Instead, in its statement the spokesperson cited crime concerns as the prime motivator: “Ken left Illinois for a simple reason: the state is devolving into anarchy. Senseless violence is now part of daily life in Chicago.”
Griffin’s letter to Citadel staff also made no mention of taxes as being a reason for the move. Instead, it rhapsodized about how Miami “embodies the American Dream — embracing the possibilities of what can be achieved by a community working to build a future together.”
U.S. Sen. Tom Cotton spent his Wednesday afternoon at Jethro’s BBQ ‘n Bacon Bacon in West Des Moines. He didn’t come for the food: The Arkansas conservative came to help Iowa Sen. Zach Nunn launch his campaign’s veteran coalition, offering his support in the race against incumbent U.S. Rep. Cindy Axne.
It’s not the senator’s first visit to Iowa this year. It’s his eighth since 2019. And while Cotton said his visits to Iowa are to help elect Republicans in November, Iowa Republicans are well aware of why political figures flock to their state.
“So we have Senator Cotton, Tom and his, wife, Anna, come out and join us because there’s a lot of people here in Iowa who like your leadership,” Nunn said. “And oh, I like to think that people come here and support Kelly and me, but it just so happens that Iowa’s 3rd (District) happens to be on the pathway to a certain house somewhere down the road.”
Less than two years out from the next Iowa caucuses, Republican politicians are coming to campaign in support of GOP candidates as they feel out a potential presidential candidacy.
But it’s still early for candidates to officially throw their hat into the ring. Cotton said he was in Iowa because it holds important races for Republicans’ goal to win back the House and Senate, like electing Nunn and re-electing U.S. Sen. Chuck Grassley.
“This is a very critical election,” Cotton told reporters. “So I’m gonna keep my eyes on the election ahead of us and we’ll decide about future elections in the future.”
Republicans take first steps in Iowa
Cotton isn’t the only one making up his mind on running. Last week, Former U.N. Ambassador Nikki Haley made her way around Iowa, joining Republican U.S. House candidates on the campaign trail and speaking at a private fundraiser for Gov. Kim Reynolds.
Haley, a former governor of South Carolina, has not officially entered the presidential race, but told reporters at an event supporting U.S. Rep. Randy Feenstra that she plans to defend America in whatever role she can.
“If it looks like there’s a place for me next year, I’ve never lost a race,” Haley said, according to the Des Moines Register. “I’m not going to start now. I’ll put 1,000% in and I’ll finish it. If there’s not a place for me, I will fight for this country until my last breath.”
Some Republicans who ran for the 2016 presidential nomination are also making their way back to Iowa. U.S. Sens. Marco Rubio and Ted Cruz have both made stops in the state after former President Donald Trump’s defeat in 2020. Cruz, who won the 2016 Iowa caucuses, came in August 2021 to support U.S. Rep. Ashley Hinson’s campaign, and promised America’s “revival is coming.”
Rubio also visited in August 2021. He said he is focused on his own re-election in Florida for 2022, but spoke about maintaining friendships in Iowa.
Trump looms large
But the 2024 Republican caucuses may not be a free-for-all like the Democratic caucuses were in 2020. Trump lost to President Joe Biden in 2020, but still holds major sway over both the Republican party and GOP voters.
Trump brought in a huge crowd at his Des Moines rally in October 2021, where he endorsed Grassley and reiterated his claims that he won the 2020 election.
But the former president has not officially said whether he plans to run again. A Democratic super PAC filed a complaint with the Federal Elections Commission in March, alleging he violated campaign finance laws by spending his PAC money on events without declaring his intent to run again as a presidential candidate.
“I mean, I know what I’m going to do, but we’re not supposed to be talking about it yet from the standpoint of campaign finance laws,” Trump told reporters in September, when asked about the next presidential campaign cycle.
Trump has a 53% approval rating in Iowa, according to an October 2021 Des Moines Register/Iowa Poll. But some Republicans say there’s enough room for other candidates to win the caucuses, should the former president run again.
Those other candidates may include Trump administration alumni. Besides Haley, former Secretary of State Mike Pompeo has visited Iowa three times since the last presidential election, and talking about foreign policy and American security. In June, he launched ads in Iowa and South Carolina praising religious freedom wins in the U.S. Supreme Court.
Former Vice President Mike Pence is also visiting Iowa ahead of any 2024 announcements. His candidacy could draw ire of Trump supporters among the Republican base. But conservatives extended Pence a warm welcome in Carroll this April, where he spoke in support of re-electing Iowa Republicans and criticized Biden’s tenure as president.
Pence has faced backlash for his break with Trump on the validity of 2020 election results. But Pence still aligned himself with the former president on conservative victories from their tenure, like the many conservative appointments to the U.S. Supreme Court and other federal courts. Pence said he hopes for more conservative wins in Iowa, and nationwide.
“The good news is, despite all the setbacks we’ve seen in the last year and a half, the Republican Party is fighting back all across America and all across Iowa,” Pence said.
The field is still open
While many Republicans have visited Iowa ahead of the November election, other conservative favorites have yet to stop in the first-in-the-nation caucus state. Polling compiled by FiveThirtyEight shows Florida Gov. Ron DeSantis often comes in second behind Trump among voter rankings of potential candidates. DeSantis has yet to visit Iowa.
Chris Christie, former New Jersey governor and presidential candidate, has also stayed away from Iowa ahead of the midterms despite speculation of another presidential run. U.S. Sens. Josh Hawley and Ben Sasse are in the same boat.
Conservative politicians who are not on the national radar may also decide to enter the race in the coming year.
Brad Whitmore, a veteran who attended the Zach Nunn campaign event, said he thinks Cotton would be a good candidate for president. But he added, “Well, I think (Iowa Sen.) Joni Ernst is a possible candidate, too. She’d make a good president.”
— Kathie Obradovich contributed to this report.
Reagan White House Solicitor General Charles Fried explained how Republicans are conducting a "slow-motion coup" during a Wednesday appearance on MSNBC.
"Our next guest was four years old when he fled Czechoslovakia with his family in 1939 to escape Nazi terror," MSNBC's Lawrence O'Donnell reported. "Twenty-two years later, he became a Harvard Law professor."
O'Donnell noted that now-Justice Samuel Alito worked for Fried and he testified at John Roberts confirmation that the nominee was "too smart a lawyer to overturn Roe vs. Wade."
O'Donnell noted a November op-ed Fried wrote for The New York Times titled, "I Once Urged the Supreme Court to Overturn Roe. I’ve Changed My Mind."
"To overturn Roe now would be an act of constitutional vandalism — not conservative, but reactionary," Fried wrote.
O'Donnell put an email on-screen that Fried sent to his producer.
"Unions, religion, second amendment, abortion, campaign finance, gerrymandering, regulation of elections. All this is an attempt in the last ten years or so to repeal the 20th century," he wrote. "The greatest threat next term: the 'independent legislature clause' case from North Carolina which would produce a slow-motion coup d'état."
Fried expanded on his analysis.
"What the court is going to have next term, they're gonna start in the fall on this issue and that is, when a state legislature picks electors, the state supreme court cannot do anything about it, because the constitution says that the regulation of electors is supposed to be done by the independent legislature," he explained. "Now, for decades, that has been understood to mean the whole legislative process in a state which includes, of course, the state supreme court."
He explained how such a U.S. Supreme Court ruling would make state gerrymandering of legislative districts even worse.
"North Carolina, which is the case involved, is a hideously gerrymandering," he explained. "The population is half registered Republican, half registered Democrat, but its 13-person congressional delegation is ten Republicans, three Democrats," he said. "And when the head of the legislative committee was asked, 'How did you do that? How come you did this?' 'Because we couldn't think of any way to get just two Democrats.' Now, this is what would be the coup d'état, because these gerrymandered state legislatures in all of the swing states – Pennsylvania, Ohio, Wisconsin, North Carolina, Georgia — would then be able to send the electives -- the electors they choose, not the electors chosen by the people. and there is nothing that could be done about it."
In the over 50 years he has been at Harvard Law, he taught Criminal Law, Commercial Law, Roman Law, Torts, Contracts, Labor Law, Constitutional Law and Federal Courts, Appellate and Supreme Court Advocacy.
Watch below or at this link.
Reagan White House Solicitor General Charles Fried www.youtube.com