Illinois House Passes 32% Income Tax Hike
The bill heads to the Senate, but if passed, Gov. Rauner said he will veto.
Just days after a judge demanded Illinois pay $293 million toward Medicaid bills, the state’s House decided to permanently hike the income tax rate by 32%.
15 Republicans voted for the bill, which Illinois Policy documented on Facebook. But Republican Governor Bruce Rauner announced that he will veto the bill if it lands on his desk:
“Under Speaker Madigan’s direction, legislators chose to double down on higher taxes while protecting the special interests and refusing to reform the status quo. It’s a repeat of the failed policies that created this financial crisis and caused jobs and taxpayers to flee” Rauner said in a statement.
“Illinois families don’t deserve to have more of the hard-earned money taken from them when the legislature has done little to restore confidence in government or grow jobs. Illinois families deserve more jobs, property tax relief and term limits. But tonight they got more of the same.”
Illinois has officially entered its third fiscal year without a budget. Rauner ran on promises not to raise taxes or spending with a few exceptions. He said he would approve “an income tax hike if it’s limited to four years and paired with a four-year property tax freeze.”
This tax hike will raise the income tax “from 3.75 percent to 4.95 percent, while the corporate tax rate would go from 5.25 percent to 7 percent.” The Democrats also closed corporate tax loopholes.
Democrats tried to make up for tax hikes by restoring “the research and development and manufacturers’ tax credit to attract more businesses.”
The Democrats also made last minutes changes. From NBC Chicago:
House Republicans met privately to discuss the last-minute changes to the more than $36 billion spending plan before the vote, with Minority Leader Jim Durkin reportedly calling the introduction of the 638-page amendment without advising his caucus “a sign of bad faith.”
“The Democrats made matters more complicated by filing a new spending bill within the last 15 minutes,” Durkin told reporters after meeting with his caucus. “We have no idea what’s in it. To take a tax increase vote before knowing what you’re spending on, to me is irresponsible.”
Before the vote, Durkin also reminded his colleagues that they will be “voting for the largest tax increase in Illinois” and that they “forget that there are people outside of this chamber who are going to pay for it.”
The Republicans who voted yes:
Some of the excuses they gave for voting yes to hiking income taxes. From The Chicago Tribune:
Indeed, Rep. David Harris, R-Arlington Heights, voted in favor of the tax bill, saying Sunday that he was not elected “to preside over the financial destruction of this state.”
“How many of our business people have told us they need stability?” Harris said. “This revenue bill gives them that and it ends some of the horrible dysfunction that has infected our government.”
More from The Chicago Sun-Times:
“If I lose my seat so be it,” state Rep. Michael Unes, R-Pekin said, adding the state shouldn’t have gotten so close to a financial collapse.
“Without this, we will lose thousands of lives and thousands of jobs and the alternative is so much worse. I don’t like this. This is not easy. This is really, really difficult,” Unes said. “But the alternative is much worse than this. The alternative is literally taking our state off the cliff.”
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So, the old tactic is being deployed, but this time the target is a state, rather than a city (the more usual victim).
Make the state fiscally untenable for anyone with a taxable income; force them to leave for their own financial survival. The remaining population will then give the Democrats an unbreakable lock on all elective offices, in perpetuity.
This solves the pestilential problem of voters getting in the way of lucrative careers, but it doesn’t solve the state’s money woes. Since the crippling increase in tax rates can’t possibly solve those, the state must be counting on its ability to extort money from outside. And that means the Feds.
They’re deliberately putting themselves in a position where the only possible fix is an enormous Federal bailout.
I saw a comment recently that goes to how I viewed state bankruptcy. Lose recognition as a state, with Senators and Representatives losing their seats also.
It gets more complicated with the new(ish) considerations of splitting states, as in… who gets stuck with the bill?
The ones who got the benefits?
The ones who are keeping the state assets (and how liquid are those “assets”)?
Offhand, I would go with a “nobody gets back in until all debts are paid.” But a problem there is the Federal Judges’ propensity to pick donors and beneficiaries from the debtors and call it good (Delphi?), although some of the pension stuff is literally boat anchor material. And some states like Illinois slipped into the state constitution that pensions were sacrosanct, permanently recognizing the current union contracts that let union employees’ retirements be funded at the taxpayer’s cost after going back to government work for at least one day.
Hmmmm….. That sounds interesting….
So have big bankruptcy, liquidation sales of public assets maybe?
Maybe start the sales with the offices of those taxing politicians?
More good reading on this matter from a Chicago based economist.
Illinois Taxoholics Wear Down Rauner: Massive Tax Hikes In the Works
https://mishtalk.com/2017/07/01/illinois-taxoholics-wear-down-rauner-massive-tax-hikes-in-the-works/
These IL Repubs are full of it. It’s never a revenue problem.
It’s always a spending problem.
Over decades the Democrats, lead by the odious Mike Madigan, have caused this problem. They shouldn’t be helped out in the least. The voters bear as much blame, returning Democrats to legislative control election after election.
The comedy of it all is: what was all the ‘spending’ was spent on?
There’s the problem.
Fed bailout will not fly with the present administration. Going to be a very large bankruptcy auction.
… pour le encouragement des autres.
I’ll need another bucket of popcorn, please.
… coming to a state near all of us… they don’t give a rats behind cause most, if not all, receive lifetime benefits themselves…
Time to whack their benefits off completely!
Conservatorship is a legal concept in the United States of America. A guardian or a protector is appointed by a judge to manage the financial affairs and/or daily life of another due to physical or mental limitations, or old age.[1] The conservator may be only of the “estate” (financial affairs), but may be also of the “person,” wherein he/she takes charge of overseeing the daily activities, such as health care or living arrangements of the conservatee.
Turn Illinois into a territory stripped of legislative power in Washington until it pays off its debts…
There is a very simple other choice started cutting spending from the top until you get to where it matches your revenues then take cut a little bit more off stop pass the bill get it signed done.
“Until the last nickel is taken from the rich, who have stolen from all the poor, no increase in taxes is enough….” Just waiting for that canard to echo through the halls of Springfield.
Such a shame to see Illinois getting a bad rap while the US Congress gets away with over- spending trillions. What’s good for the goose is good for the other goose (our nation doesn’t have too many gander legislatures).
Rather deceptive article. I hate state income taxes as much as the next guy (federal as well), but the increase is actually only 1.2% more. Sure, that’s 32% of 3.75, but misleading.
Don’t confuse “percent increase” with “increase in percentage points.” News readers mix this up all the time with their sloppy vocabulary and reporting.
Here is a simple example to show the fallacy of the “only 1.2% increase” nonsense.
($5000 of taxable income) x 0.0375 = $187.50
($5000 of taxable income) x 0.0495 = $247.50
If you paid $187.50 one year in taxes and $247.50 the next, guess what? You’re paying (drum roll please) 32% MORE IN TAXES.
Yes – a 32% increase in the personal income tax. Not “only 1.2%.”
Go back to 8th grade math.
I’m actually surprised Illinois’ income tax rate is so low. My marginal NE rate is just a hair under 7% (effective rate around 4.5%). For a dumpster fire like Illinois, I’d expected them to be pushing 10% awfully hard, like California.
Give them time.
Actually, Kansas is going through a variant of this. Brownback cut taxes when he took office, expecting the economy to go through a cycle, and when the economy stayed flat (thank you, Obama), tax revenue did not match anywhere near expectations. Multiply this by a KS Supreme Court made up of 6 liberals and one conservative, who seem to have made it their life duty to force higher spending on education in the state every time they get a chance, and Brownback’s term has been rocky, to say the least.
Now, moderate Republicans have ganged up with liberal Democrats to ram through a massive tax bill along with spending increases (to get needed Dem votes) over his veto, leaving Kansas with (in theory) extra money when all is said and done.
I’m betting on a ruling from the KS Supreme Court which will glom onto all that money for the schools and then some, putting us right back in the fiscal jam we started in.
Don’t worry, they nickel and dime us sixty ways to Sunday, plus the property taxes can only be described using words and phrases not fit for polite company.
There are minimal deductions from you gross income before computing the tax. It is a 5 line form. It is a huge tax bite.