Illinois Tax Increase

January 12, 2011 by USA Post 

Illinois Tax Increase, (AP) – Democrats in the Legislature of Illinois on Wednesday approved an increase of 66 percent income tax in a desperate and politically risky to put an end to the crisis crippling the state budget.

The increase will now Democratic Governor Pat Quinn, who supports the plan to temporarily raise the rate of income tax to 5 percent, an increase of two thirds of the current rate of 3 percent. Corporate taxes would also rise as part of the effort to close a budget hole that could reach 15 billion this year.

Raising taxes and generate about 6.8 billion a year, Quinn’s office said – a significant increase by any measure. In percentage terms, 66 percent may be the largest increase in any state has adopted recently struggling with economic difficulties.

It will be coupled with 2 percent strict limits on spending growth. If officials violate these limits, the tax increase will be automatically canceled. Supporters of the plan warned that rising health care costs and retirement health will probably eat all expenditures authorized by the plugs, imposes cuts in other areas of government.

Other pieces of the budget plan failed.

Legislators and rejected an increase of 1-a-pack cigarette tax, which would have provided funds for schools. They also blocked a plan to borrow 8.7 billion to pay overdue bills to the state, which means that companies have long suffered and social service agencies will not get their money soon.

Speaker of the House Michael Madigan, sounding tired; said Republicans should have supported some parts of the plan instead of voting against everything.

“They are the key. They do not want to get on the playground, “said the Democrat from Chicago. “I am pleased that the day is over.”

But Republicans noted that they were not included in the negotiations. They also fundamentally reject the idea of raising taxes, after years of spending growth.

“We say to the people of Illinois,” For eight years we’ve gone, now we’ll do it your problem, “said Rep. Roger Eddy.” We make our mistakes on the back. ”

This increase means a resident of Illinois, which must now and 1000 in income taxes will pay $ 1,666 at the new rate. After four years, the rate falls to 4 percent and then does the same taxpayer $ 1333.

Republicans predict the tax will eventually be made permanent.

“This is a cruel hoax to play on people that this is temporary,” said Minority Leader of the House, Tom Cross, and R-Oswego.

Democrats bristled at the idea that they are to blame for the financial problems of the state, even if they have controlled the governor’s office and both legislative chambers since 2003.

They said certain parts of the problem began under Republican governors and Republicans that supported some of the budgets that increased spending. They claimed the national recession sent state revenues plummeting and the Democrats have already reduced spending several billion dollars.

“This mess is a disorder that is the responsibility of each of us as Republicans and Democrats, governors of several different and some of the damage is not even anybody’s fault,” said Majority Leader House Barbara Flynn Currie, D-Chicago.

The money from new taxes to balance the annual budget of the state and let officials begin to eat away the backlog of unpaid bills. Borrow money and then repaying with a portion of the tax increase would have allowed these bills to be paid immediately, assist organizations that provide state services, but spend months without be reimbursed.

The delay and the spending limits are “very disturbing” to groups pushing the state to find the money to pay its bills, “said Sean Noble, director of policy for Voices for Illinois Children, a member of the Coalition level State budget chief. However, he called the tax increase a “significant step” towards putting in Illinois a solid financial base.

The proposal adopted by the House on Tuesday evening by a vote of 60-57, the bare minimum. No Republicans supported the measure, or Senate, the measure was adopted 30-29.

Legislative leaders were eager to pass the plan before a new General Assembly was sworn in Wednesday, taking a slice of the Democratic majority and eliminating lame duck legislators who might be willing to support the tax before leaving office.

The governor refused to discuss the tax proposal to the public, although his aides say he supports it. During his campaign, Quinn has vowed to oppose any tax plan that was higher than his proposal for an increase of 1 point.

Earlier Wednesday, the office of Quinn called the measure approved “strong action” that will strengthen the budget and actually help the economy of the state.

Republicans Democrats accused of doing irreparable damage to families and businesses in Illinois. Business leaders have denounced the proposal as a job-killer.

“Based on this bill the only businesses that benefit are moving companies who will help many of my out of this particular state,” said Gregory Baise, chief of the Illinois Manufacturers Association.

“This nuclear bomb bills job,” said Senator Dan Duffy, R-Lake Barrington.

Democrats countered that even with the increase, the tax rate will be lower in Illinois than in many neighboring states – the highest rate in Iowa is 8.98 percent; Wisconsin was 7 75 per cent. They also argue that without more money, the state government may not be able to pay employees by the end of the year. Major government services could be stopped, they warn, and groups waiting for state payments will go under.

“The wolf is at the door, ladies and gentlemen,” said Rep. Greg Harris, D-Chicago.

The spending limits were added to the plan to win the support of some Democrats in the suburbs. Republicans said the limits are not enough to quell.

The limits allow for spending next year to increase dramatically if the state can make its necessary contribution to the pension systems of government, pay overdue bills and cover other costs that had been set aside. After that, however, spending may not grow over 2 percent annually for the next three years, or tax increases could be reversed.

“We’re really trying to handcuff us and the governor of our expenses,” said Illinois Senate President John Cullerton, a Democrat from Chicago.


Associated Press writers Christopher Wills and Zachary Colman contributed to this report.

Bill SB2505.

Copyright © 2011 The Associated Press. All rights reserved.

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