panoramio.com / fish667
The Illinois Statehouse
With not a single vote to spare, the Illinois House on Tuesday approved a plan to hike the personal income tax rate.
Just about an hour earlier, the House shot down a more than 100 percent increase on the tax for a pack of cigarettes. The measure to hike the tax to $1.98 per pack, up from $.98, got 51 votes, but needed 60 to pass.
The cigarette hike, estimate to produce about $375 million, could be brought back for another vote later.
The income tax plan would temporarily bump the state's personal income tax rate to 5 percent, up from 3 percent now. That's a slightly smaller increase than Democratic leaders originally proposed.
"Time to act like grownups. Time to face the consequences of the actual recession that all the states face,'' House Majority Leader Barbara Flynn Currie told a committee before it voted to
advance the tax increase to the full House.
The tax package could generate about $7 billion a year, enough to balance the annual budget and begin chipping away at a backlog of unpaid bills. Also baked into the plan is a scaled-back rise in business taxes, boosting the 4.8 percent corporate tax rate to 7 percent instead of 8.4. It also proposes a spending-increase cap of 1.7 over the next four years.
If spending grows more than two percent a year, the income tax increase would immediately be canceled, officials said.
Business leaders decried the proposal, calling it a job-killer. Raising the personal tax rate triggers a corresponding jump in corporate rates.
"Only in the state of Illinois with a straight face would it be said that raising taxes will be a stimulating activity to the economy," Gregory Baise, head of the Illinois Manufacturers'
The budget tweaks come in the wake of lawmakers bawlking at Gov. Pat Quinn's campaign pledge to raise taxes to fix Illinois' troubled economy.