 Plans for a tax hike being floated in Springfield range from
temporary to permanent and from a 1 to 2 percentage point increase.
A 2 percentage point income tax increase, which amounts to taxpayers
handing over 66 percent more to the state, would bring in more than
$6 billion additionally each year to state coffers, according to
Kelly Kraft, spokeswoman for the Governor's Office of Management and
Budget. She said a 1 percentage point increase would generate about
half that, or $3.1 billion.
Gov. Pat Quinn has mentioned borrowing $14 billion to cover the
state's debts and adding an additional tax increase to cover the
debt payments. For every quarter percent jump in the income tax, the
state brings in about $700 million, Kraft said.
The personal income tax is currently set at 3 percent. What the
median Illinois household would owe under an increase depends on the
wording in the actual legislation, according to Larry Joseph, budget
and tax expert for the advocacy group Voices for Illinois Children.
"It would depend on whether all there was, was a rate increase,
or whether there were any changes in tax credits or tax exemptions,"
Joseph said.
The Illinois Senate approved a 2 percentage point increase in
2009, but it never came to a vote in the Illinois House of
Representatives. It included several tax breaks to make it easier on
low- to middle-income families.
"Nobody likes tax increases -- in fact, tax increases are the
blunt instruments of politics. They are used that way politically,"
said Ralph Martire, executive director of the Center for Tax and
Budget Accountability.
Quinn has been in contact with the four legislative leaders to
discuss a possible tax increase.
"Conversations have been very productive, and many different
options are being discussed," said Annie Thompson, a Quinn
spokeswoman.
If lawmakers can come to an agreement on a plan, it likely won't
be enough to plug the budget gap, which is approaching $15 billion.
"Over the long term you would still have a structural imbalance.
It would obviously be lesser than today, and they would be able to
pay a number of back bills, and it's a significant step forward
because it is a structural reform. It's not a Band-Aid. It's
adjusting the rates. That's really a structural change," Martire
said.
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Adding to the state's tax revenue woes, income tax collections
dropped from $10.3 billion in 2008 to $9.2 billion in 2009,
according to information released Wednesday by the U.S. Census
Bureau. Joseph placed the blame for this and some of Illinois' other
fiscal problems on the current state of the economy.
"In 2011, the estimates are (that) revenue will only be up
slightly more than they were in 2010. So in 2011 we're still almost
$2 billion lower (in total revenue) than we were in 2008," Joseph
said.
Martire said that because of the recession and the state's tax
structure, an increase is necessary to just maintain the current
services the state provides.
"Every year, revenue growth from our various tax services is not
enough to accommodate the growth of and cost of providing the public
services the state provides, even if you are trying to cover it
based on inflation and population," Martire said.
The Legislature has been looking at other places to save money,
as well. Serious changes to the state's Medicaid system ran through
the Senate Wednesday, and ideas on changing workers' compensation
have been floated.
Also, House Speaker Michael Madigan, D-Chicago, recently
introduced constitutional amendments that limit the growth of the
state's budget and make it harder to increase public pension
benefits.
[Illinois
Statehouse News; By ANDREW THOMASON]
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