 The General Assembly on Wednesday approved a 66 percent personal
income tax increase. The Senate approved the measure early
Wednesday; the House voted late Tuesday.The increase passed with
only Democratic votes less than 12 hours before a new legislature
was set to be sworn in.
Rates would go from 3 percent to 5 percent for individuals. For a
family of four making $40,000, that would amount to an extra $800
paid to the state every year. The corporate income tax will go from
4.9 percent to 7 percent.
Both increases go into effect immediately and are estimated to
bring in more than $6 billion annually. The extra income would be
used to pay down the state's deficit, which is approaching $15
billion this year.
The hike now moves to Gov. Pat Quinn's desk for his signature,
where it is likely to get signed, according to people speaking for
the governor.
State Rep. Pat Verschoore, D-Milan, doesn't expect many people to
be happy with his vote for the increase. But he said Illinois is
facing a coming fiscal tidal wave and has simply run out of options.
"Nobody wants to raise taxes. It's going to cost me money just
like everybody else, but I think it was the right thing to do,"
Verschoore said.
The increase is scheduled to last only four years. After that it
would be up to a new legislature whether to extend the increase or
let it expire. A similar situation arose the last time a temporary
tax was approved in Illinois. That increase was made permanent in
1989.
House of Representatives Republican Leader Tom Cross called on
that example and said the notion that this tax increase would be
temporary is "clearly false."
"You're setting up a scenario in 2015 when this tax is supposed
to revert back; the base is going to be so high that you can't do
it. It's kind of absurd," he said.
Republicans stood in opposition to the plan, saying it is a jobs
killer.
"There is no question, no question that there will be job loss
with this tax increase. So be prepared to tell your unemployed that
you're going to make their opportunity to get back to work harder,"
said Matt Murphy, R-Palatine.
In addition to hitting families struggling with the recession,
the move will drive businesses from the state, according to state
Rep. Roger Eddy.
"This does nothing to reverse what has become a perception across
this country about Illinois being closed for business," the
Hutsonville Republican said.
Murphy said to look for an effort to repeal the increase,
starting Wednesday in the new legislature.
[to top of second column] |
David Vaught, Quinn's budget director, said Illinois' fiscal
health is contingent on a tax increase.
"Most of this money is temporary so we can restore fiscal
stability and get our house in order and pay our bills. That's what
we're doing here," he said. "Without that kind of stability you
don't have stability in your business climate, you don't have
stability in your vendor relationships, you don't have stability in
your relationships with school districts or local governments. And
you can't. It's too much chaos."
An attempt to borrow $8.7 billion, paid back with the increase,
to immediately pay off the state's backlog of bills, failed in the
House. It needed a three-fifths majority in both chambers to pass.
And that would have required GOP support.
"Our guys have said, let's slow down; we have to continue to
fundamentally focus on changing government," Cross said. "One of the
things we're going to talk about is maybe the size of that borrow,
the length. We're going to talk about some cuts; we're going to talk
about some other fundamental things we need to talk about."
Cross said the state needs to look at changes to its pension and
workers' compensations systems, as well as other cuts, before
raising the taxes.
Included in the tax increase plan is a limit on government growth
to about 2 percent for the four years the increase is in place.
Republicans claim this creates systematic growth for the government,
while Democrats said it would handcuff the legislature into fiscal
responsibility.
An attempt to pass a $1.01 tax increase for a pack of cigarettes
failed in the House. The measure was estimated to generate $377
million for an education improvement fund.
[Illinois
Statehouse News; By ANDREW THOMASON]
 |
