Leaders of Illinois' Republican caucus say an increase in the state corporate and personal income tax has been a failure since it was passed by Democrats nearly a year ago. They’re calling to repeal the hike that Governor Pat Quinn’s office says brought in and additional $7 billion to the cash-strapped state in 2011.
Senate Republican Leader Christine Radogno and House Minority Leader Tom Cross said on Thursday that the tax increase, which is supposed to remain through 2014, has so far failed to solve the state's budget problems. They point to Illinois' recent credit downgrade from Moody’s and what the state comptroller’s office estimates to be $8 billion in unpaid bills as proof.
“People know we don't have a handle on this budget, and their afraid of that other shoe that's going to drop and what that might look like,” Radogno said.
The Democrat-controlled House and Senate passed the tax increase in January of last year in the final hours of a lame duck session. The bill raised the personal income tax two percentage points from 3 percent to 5 percent, and upped the corporate rate from 4.8 percent to 7 percent.
Republicans estimate the average Illinois family now pays an additional $1,000 in taxes a year because of the hike. Cross and Radogno said Thursday that Republicans fear the tax increase will be permanent and accused Democrats of not curtailing spending habits after the increase.
“The Democrats who passed the tax increase are continuing to spend those revenues and spend it on a path that means the increase will be permanent,” said Radogno. “And we still won’t be able to correct and improve the bottom line here on the state.”
Legislation to reverse the increase was introduced by Republican State Sen. Matt Murphy weeks after Gov. Pat Quinn signed it into law, but no vote has been taken on it. Republicans are in the minority in both the House and Senate, making repeal difficult.
Illinois Gov. Pat Quinn argued the tax hike was needed to keep Illinois' deficit from reaching $15 billion.
Kelly Kraft works for the Governor’s budget office. She said without the tax increase, Illinois would return to 1998 spending levels.
“If we repeal the tax increase – unless they propose a plan to repeal reality – we just can’t take the plan seriously,” said Kraft.
The tax rates are scheduled to drop in 2015. The personal income is scheduled to decrease to 3.75 percent, while the corporate rate is supposed to drop to 5.25 percent.
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