Paying More to Work In Illinois

Governor could propose a 50 percent tax hike

It's no real surprise to those who have been following the drama in state government in recent months, but Gov. Pat Quinn confirmed on Friday that he's planning to raise state income taxes.

The governor wouldn't specify the size of the increase and said, in fact, that thousands of Illinoisans will actually see their taxes reduced through an increase in the personal exemption. 

The Chicago Tribune on Friday reported an eye-popping 50 percent increase in the offing, calling the move "politically risky." Some insiders -- and taxpayers -- however, say that it's just a necessary move towards survival.

Speaking at an impromptu news conference Friday, the governor would neither confirm nor deny that he plans to ask for an increase from 3% to 4.5%, preferring to focus on what he insists will be a fairer system. 

"For the people who are most vulnerable, we're not going to tax those people further into poverty," he said.  "There will be some who will have a higher tax burden, but it will be based on something we all believe in -- ability to pay."

Without outlining any numbers, Quinn said that a family of four with an income of $57,000 or less, would see no increase.

Facing the biggest budget dilemma in state history, any income tax hike in Illinois would be the first in 20 years.

The tax hike would be made slightly more palatable to taxpayers by a raise in the standard tax exemption from $2,000 per person to $6,000.

By comparison, Wisconsin residents shell out between 4.6 percent and 6.75 percent of their income in tax.  Indiana residents pay out 3.4 percent, according to The Tax FoundationView a state-by-state comparison of income taxes.

Lawrence Msall, of the tax watchdog group The Civic Federation, says his organization will not support any tax increase which is not coupled with signifigant cuts in state spending. In a report released this week, the organization said an analysis of Illinois' finances shows "deep cuts" might be necessary. 

"Raising broad-based taxes in a recession to close a budget deficit would be counterproductive and could further exacerbate the ill-effects of the recession," the report says, also warning that the state should not consider borrowing to solve its problems. 

"Borrowing funds for operational expenses is a monumentally poor deal for taxpayers."

The Tribune reports that Quinn is scheduled to tell lawmakers how he wants to fix a state budget that could be more than $9 billion in debt by July 2010 amid a sinking economy and declining revenues.

Responding to the news of a likely income tax increase, former Gov. Rod Blagojevich essentially said, "I told you so." 

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