CHICAGO (CBS) – The oldest non-partisan government research organization in the state says the proposed Illinois income tax increase will not help lower the state’s $15 billion deficit.
As WBBM Newsradio 780′s Mary Frances Bragiel reports, the proposal calls for increasing the individual income tax rate to 5.25 percent, up from 3 percent, and hiking the corporate rate to 8.4 percent – the highest of any state in the union.
LISTEN: WBBM 780′s Mary Frances Bragiel Reports.
Taxpayers who currently owe $1,000 will pay $1,750 with the new rate.
Laurence Msall, President of the Civic Federation says the increase, coupled with Gov. Pat Quinn’s proposal to borrow about $8 billion more, will not make a dent in the state’s deficit.
“This has the potential to have the State of Illinois in the same fiscal position that it was before they raised the taxes,” Msall said.
Instead, Msall believes the structural deficit needs to be fixed. If it’s not, he says could lead to the lowering of the state’s credit rating.
“And at some point, the credit markets and the rating agencies will not afford you the opportunity for reasonable borrowing,” Msall said.
The permanent portion would be used several ways. Some would be devoted to schools and some to repaying an $8.5 billion loan that would be used to pay overdue bills, state Senate President John Cullerton said.
Another chunk would go to property tax relief in the form of annual $325 checks, he said. The checks would replace the property tax exemption that homeowners can now claim on their income taxes.