Illinois House and Senate pass 67% income tax increase

[muon2]

The tax may seem modest but there are other factors that make it worse than it seems.

IL has one of the highest sales taxes in the nation when the local share is added. Some items in some jurisdictions exceed 11% and Chicago has the highest sales tax of any major city, only recently having it drop from 10.25% to 9.75% after it cost the Cook County Board President reelection in 2010.

The property tax burden is also quite high in IL. The state typically ranks in the bottom third of states for property taxes for business as assessed by the Tax Foundation. The high tax is largely due to the high reliance on local property taxes to fund schools, in this respect IL is among the 5 states with the least use of general state funds to support schools. Suburban Chicago taxpayers outside of Cook may pay property taxes equal to 4% of the value of their homes. The Cook rates for primary residences are set low by state statute and skew the average rates for the state as a whole.

The income tax in IL had been one of the lowest rates in the US, but there are virtually no deductions, so it is often comparable to states with higher rates that do permit some of the common deductions found in federal tax code. Finally there is an additional income tax on businesses equal to 2.5%. It's called the personal property replacement tax, and is distributed to local governments, but it really is an income tax, so the new corporate rate is not 7% but 9.5%, and applies even for the lowest income businesses.

I wouldn't look only at the income tax hike, but how this positions IL in competition with other Midwestern states when the whole tax environment is assessed.

[muon2]

Is it true that the Dems did not cut the budget to make the books balance, so the split was 100% on the increased revenue side, and 0% on the cut spending, side Muon2?  I read that somewhere and found it hard to believe, but then, stuff happens out there.

If it was the 100-0 solution, that Obama's alleged preference for the feds squaring the circle of a 50-50 split makes him seem like a radical conservative, pinch pennying, miserly, social Darwinist, by comparison.

The only legislated cuts were some bipartisan reforms for Medicaid that will save probably less than 1 B$ over 5 years. The tax hike was accompanied by a bill that limits expenditure growth to no more than 1.8% per year for four years - that's growth, not cuts. There's of course an out for that, in that the governor can call an emergency.

I'd say that pretty much puts it all on the taxpayer.