State income tax cut could wreak havoc in Illinois - FOX 32 News Chicago

State income tax cut could wreak havoc in Illinois

Posted: Updated:
CHICAGO (FOX 32 News) -

Illinois lawmakers are scrambling to cut billions of dollars from the state budget.It follows the apparent collapse of efforts to postpone an income tax cut scheduled to take effect next New Year’s Day.

When Speaker Michael Madigan pushed a 67 percent income tax increase through the Illinois House in 2011, it took just a few hours. But after trying for months to extend the temporary increase, Madigan answered a question from Republican Rep. Ed Sullivan Thursday by declaring that fight all but lost.

“Would your question relate to the proposed extension of the income tax increase?” asked Madigan.

Sullivan responded, “Yes, it would.” Madigan then said, “Right. I think as a result of yesterday, that's pretty much moot.”

On Wednesday, Madigan said there were barely half the 60 votes needed in the House to keep the current 5 percent income tax rate, now set to drop to 3.75 percent on January 1st. Illinois taxpayers would get to keep about $2 billion in the 2015 budget year and a lot more in 2016.

However, Governor Quinn and other top Democrats in Springfield warned it would trigger a "Doomsday" for state services, and for state support of public schools.

Madigan said House and Senate Democrats were discussing Thursday how to cut as much as $4 billion from a 2015 budget they had previously drafted. Madigan also said Republican legislators were invited to join as well.

Critics claim the income tax increase itself brought a sort of Doomsday to Illinois' economy after it was enacted in 2011. It's taken an extra $25 billion since then from the state's taxpayers. The U.S. Census Bureau found Chicago the slowest-growing of 15 big American cities.

Studies at the University of Illinois and elsewhere reported that, before the tax increase, Illinois' economy moved in tandem with neighboring states. Since the tax increase, Illinois' fallen far behind, with unemployment now the worst in the Midwest.

Still, supporters of extending the tax increase insist that even higher state spending could revive the local economy.

“The state's not making these investments in the core services, in K though 12 education, in infrastructure, that are really kind of important to having a vibrant economy,” said Amanda Kass of the Center for Tax and Budget Accountability

Madigan signaled the income tax fight could be rejoined this November. The House Revenue and Finance Committee voted 6-4 in favor of the Speaker’s proposal to place an advisory referendum question on the fall ballot. It would ask if Illinois should impose an extra 3 percent income tax on all income above $1 million a year. Madigan last month could not win enough votes in the General Assembly to enact that idea into law.

Follow Us!

Share Your Photos & Video

Powered by WorldNow

205 N. Michigan Avenue
Ground Floor
Chicago, IL 60601
Station Operator: (312) 565-5532
Newsroom: (312)565-5533

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices