Income Tax Hike Advances In Springfield

Updated 1/11/11 – 8:23 p.m.

SPRINGFIELD, ILL. (CBS) – A major increase in state income taxes has squeaked through the Illinois House as lawmakers search for a way to solve a historic budget crisis.

The tax would set the personal tax rate at 5 percent, up from 3 percent now. That would be a 66 percent increase. Corporate taxes would climb, too.

Gov. Pat Quinn’s office says the tax increase would generate about $6.8 billion a year.

The increase passed 60-57. It now goes to the state Senate, which could still vote Tuesday night.

In a possible setback, around 6 p.m. Tuesday, the House voted down a proposal to raise the state’s 98 cent per pack cigarette tax by $1. That plan had been considered a sweetener for inner-city lawmakers who were on the fence about the income tax hike.

The Democratic tax plan wouldn’t raise taxes as high as originally planned, but would generate $7 billion in new revenue.

The proposed income tax would rise from 3 percent to 5 percent, rather than 5.25 percent as first proposed — or an increase of 66 percent, rather than 75 percent.

The business tax rate would rise from 4.8 percent to 7 percent, instead of the 8.4 percent rate originally proposed. Businesses in Illinois also pay a “Personal Property Replacement Tax” equal to 2.5 percent of income, so the plan would effectively raise the corporate income tax rate to 9.5 percent.

If the tax plan isn’t approved Tuesday night, lawmakers will have to start all over again after the new General Assembly is sworn in on Wednesday. Although Democrats will still control both the House and Senate, their majorities in both chambers will shrink.

LISTEN: Newsradio 780’s Dave Dahl reports

The battle lines were clearly drawn when the measure was debated in a the House Revenue Committee.

“You just can’t operate as a deadbeat state; and we’re already characterized as that in the national press, by the rating agencies,” Illinois Budget Director David Vaught told the committee, pushing for the tax deal hammered out between his boss, Gov. Pat Quinn, and Democratic legislative leaders.

“We’re essentially tied with California now for the lowest bond ratings in the country and if we don’t act on this, we’re gonna be at the very bottom,” Vaught said.

Illinois State Sen. Mike Murphy (R-Palatine) countered that, “Our bond rating is already the worst of all the states in the country. What would be really good for our bond rating is if there was some courage in this building among the leadership to actually seriously cut spending.”

In committee, the battle lines were clearly drawn along party lines on how to act. Even one of those Republicans thought to be sympathetic spoke out against it.

Rep. Roger Eddy (R-Hutsonville) asked, “Where are the cuts? Where are the real reductions in spending?”

Vaught said that, because the tax plan would set a cap on spending – or else the tax hike would go away – any increases in spending in one area would force cuts elsewhere.

“Those increases that are included in the cap are gonna force real spending reductions elsewhere in what I call discretionary spending,” Vaught said.

The most heated debate was over the proposal to increase the state’s corporate income tax from 4.8 percent to 7 percent.

“In the past several months, Governor Quinn and every lawmaker has promised to help create jobs and grow the economy,” Illinois Manufactures’ Association President Greg Baise said. “Based on this particular legislation, the only businesses that will benefit … are the moving companies that will be helping many of my members move out of this particular state.”

In the end, the committee vote was along party lines, but that doesn’t guarantee victory in the full House, even though Democrats control 70 seats – more than the 60-vote majority needed to pass legislation.

House Majority Leader Barbara Flynn Currie (D-Chicago) acknowledged that not every Democrat was behind the plan as of Tuesday afternoon and supporters haven’t picked up the Republican votes they’ve been hoping for.

“We still might get a few Republicans. We’re working on it every which way to Sunday,” Currie said. “I hope we’ll have them by the time we call the bill on the floor.”

Democratic lawmakers have been searching for votes in a last-minute effort to fix the state’s budget deficit, which could hit an estimated $15 billion this year. The deficit is so large that the government is borrowing money to make its annual contribution to retirement systems and is months behind in paying bills.

Rep. Frank Mautino (D-Spring Valley), a key budget negotiator for the House Democrats, said if the state doesn’t come up with more revenue soon, it will be unable to pay its own workers, much less contractors and outside service agencies already owed millions.

“We, sometime in April, will have a payless Friday, where the cash flow of the state of Illinois will not be able to go to, not only state workers, but anyone we owe,” Mautino said.

Murphy pointed the finger at Democrats for letting the budget deficit get so large in the first place.

“It’s doomsday because their legislative majorities are gonna get whittled down tomorrow because the voters decided they didn’t want the type of governance that got us into this situation in the first place,” Murphy said.

Democratic leaders want to pass something before the current General Assembly formally ends Wednesday at noon. After that, they lose some of their Democratic majority as well as “lame duck” legislators who might be persuaded to support a tax increase as they leave office.

But opponents say there should not be a tax increase right away, and instead, the new legislature should examine the state budget and chop away any unnecessary spending first.

CBS 2 Chief Correspondent Jay Levine spoke to House Speaker Mike Madigan (D-Chicago) about the plan late Monday, after Madigan left a meeting with the governor.

“There are a lot of moving parts, so that’s just one thing,” Madigan said.

Still, some early morning customers at the Golden Apple Diner, 2971 N. Lincoln Ave., said the tax hike was simply necessary.

“We live in this state. I think we should do as much as we can to support the state, and if it has to raise from 3 to 5 percent, I guess we just have to trust the decisions of the people that we voted for,” said Rick Quinn.

  • aGREED!!

    It’s idiots like this that voted for him to begin with!!! “F” them all is right!!!

  • Dave

    I be needin’ mo’ money fo’ my babies! Ain’t be gettin’ none fom da baby daddy!

    • Yanz

      Dave sounds like a man’s name. How do you have babies and a babby daddy?

      I guess you are trying very hard to be funny. Don’t quit your day job if you have one, and don’t waste your time on comedy school!

    • Average Guy

      Dave, statistic show there are more white women having children out of wedlock today. I guess they want “baby daddies” also?

      • JP

        You will have to supply your source on this comment. Not quite sure it is accurate.

      • Trisha Johnson

        Well average guy that is because the non-white women are busy killing their children…and still collecting welfare.

  • Jim

    I hope some Democrats realize this is NOT what the people want and it would be political suicide. It sounds like Republicans are using their heads on this one, but same goes with them.

  • john

    Rick Quinn is an idiot!!!!!!
    How about spending cuts.

  • JC79

    When are the people in Illinois going to wake up. Quinn won the election by a slim margin, yet only carried 4 counties. He stole the election with the vote fraud machine know as Crook County.

    The tax increase the legislature is trying to cram down everyone’s throat is nothing more that a scam to force the tax payers to fund the Pulblic Service Union’s and Teacher’s Union’s pensions. Let the teachers and employees cover thier own losses, just like the rest of us are doing with our 401k’s.

    I would also like to know if I can op-out paying FICA taxes? The Teachers and Public Service Employees do not pay this tax.

  • bob

    They could raise the tax to 10% and next election they’ll all get re-elected in the crooked state of Illinois. Best thing that ever happened to Democrats in Il are the electronic voting machines, where they can determine the outcome.

  • Vicky

    The Bears have a better chance of winning the Super Bowl this year than this does of not being passed.

  • Thomas Paine

    Hey JC

    Maybe the reason teachers don’t pay the FICA tax because they don’t get social security retirement benefits. Moron! And it was the city and state politicians who robbed the the municipal pension systems to pay other bills creating a ticking a ticking time bomb that finally exploded rather than funding the pension systems all along as the law clearly requires. Furthermore, teachers spend tens of thousands of dollars on college degrees and masters degrees to get their certifications. What are the credentials of the polticials who make decisions like foregoing pension obligations, blowing a billion dollars for parking meters in one year that was supposed to last 75 years, ? Why aren’t politicians required to pass a test on basic economics, ethics, education, real estate, etc, before they can run for office? What backgrounds to these hacks have in finance, education, admistration, government policy, etc whom we continue to entrust our lives and lively hoods to. Get a clue and use some Common Sense!

    • JC79

      Hey TP

      I have to fund my pension entirely. I have paid FICA for 30 years and the return I will receive is comical. I should also have the option to opt-out of the plan. The teacher’s pension plans and pay are ridiculous. Where else can some get a full time pay and benefits for a part time job. All that money and yet the public school system is poor at best. Since 1960, the US public school system has fallen from number one in the world to approx. 26th. All that from those “professional” teachers. Also, I like your name calling, it shows your high level of intelligence.

      JC – CPA, MAS.

      • Yanz

        FYI, Chicago teachers do pay into FICA since around 1997 and it is mandatory. Teachers prior to then can opt in to pay FICA which is a smart thing to do. Also teachers have to work about 34 to 38 years to get a full pension and that is way too long for anyone to be in the classroom, that’s just one reason why the US has fallen to almost number 30 in the world.

        I used to criticize them until I walked in their shoes. Now I an soleless.

  • Thomas Paine

    Futhermore, where is the accountability for our elected leaders? Whom do we have watching over them to make sure they do what is right and what they are supposed to do? If they goof up do they fear losing their jobs? No, especially when clueless people keep voting the same people or the hacks they support into office over and over again. Try going to your boss and telling him you just lost a billion dollars that was supposed to last the company 75 years and see if you still have a job at the end of the day. Rather than doing things right the first time these hacks look for scapegoats the public can blame, like teachers or policemen and all the taxpayers have to pay more to fix the mistake unqualified elected officials are never held accountable for. They vote on econmic issues with no economic backgrounds. They pass laws that affect businesses even though they have no business background. They put people in charge of school systems who have never taught a day in their life. They raise taxes to bail themselves out of their own mistakes and mismanagement, and we all suffer. Mosley Braun couldn’t even pay her real estate taxes on time, but people will vote for her.We all need a little more Common Sense when it comes time to vote.

    And please tell me how teaching is a part time job with all the time teachers spend outside of school , at night and on weekends, grading papers and creating lessons and coaching all evening and on the weekends and even teaching summer school to pay their rent. You want to teachers to sacrafice spending time with their own kids to help them get other people’s kids get into a good college, but you don’t want to pay them enough to send their own kids to a good school. If you hate teachers so much home school your own damn kids. Or better yet, trying teaching for a living. You seem to be so clueless as to what teachers actually have to do I am sure you wouldn’t last a month.

    • Dagmar

      very well said!!

    • vernon

      yea did you see the Operah show where Tony Danza wanted to be a teacher and found out he couldnt hack it and he went to college for it but wound up in showbiz. He found out to much pressure and kids dont listen with as you said paper grading and doing test etc they do

  • Rob

    Congratulations to CBS News for finding the one dufus in Illinois who thinks this is a good idea.

  • ak

    Unthinkable! How about self-funding IRAs and retirement at age 65 for all the hardly working municipal employees including state legislators….if they don’t like it quit…plenty of unemployed people would be happy for a paycheck…way past time to cut entitlement for state employees

    • Dagmar

      Yes, have them pay taxes, maybe they would think twice iof raising them and spending it. If I could spend money what’s not mine, what woudl I care?? I wish I could give myself a raise like the politicians do (I have not seen one the last 6 years), wish I had their insurance and pension!! This is just unbelievable!

  • Thomas Paine

    Rob, you need to watch your pronous; no knows whom you are referring to in your blog. If it was me, then you need to know I don’t think raising taxes is a good idea. I hate it more than you know, especially raising the corporate taxes, which could drive more companies and their jobs out of state. I was simply pointing out that it’s time to place blame and accountability where it belongs, with the people in charge, and time to quit scape-goating others who suffer in this mess like everyone else and start electing people who actually qualified to hold the office elected and do a good enough job to deserve to be re-elected. Blaming teachers is like blaming the police for crime in neighborghoods without ever holding the people in the neighborhoods who committ the crime accountable. Voting for people who continue to sell our city and country down the drain because of their bad or out-of-touch decisions is just as wrong.

  • kulin

    how you can raie texes in this bad time f…… idiots

    • Gerald Spencer

      It isn’t a bad time, the people out of work aren’t going to be pahying these higher taxes.

      • Dagmar

        It is a bad time, there is many people with jobs who had paycuts etc, so “yes” it IS a bad time. They should watch where they spend the money and that it is spend responsible, just like Thomas stated!!

  • JC79


    In my job, I have to produce results, otherwise I would not have one. Once a teacher is tenured, it is impossible to fire them. The results of thier performance is exemplified by the wonderful condition of our public schools. All the excuses and rambling accomplishes nothing. Results define the person or profession. The public school system speaks for itself.

  • JC79


    When you project a 15 bil. deficit and you have Public Service Union and Teacher Union pensions underfunded by 21 bil., it doesn’t take a rocket scientist to figure out where the shortfall is. We can also address the way infrastructure contracts are bid, the overstaffed and unproductive government offices, and many more issues. The fact is, cut spending, restructure the public programs, and then cut taxes to attract business.

  • Thomas Paine


    Ok, become a teacher and volunteer to teach kids who walk into your classroom reading 8 years below the grade level you teach or don’t even speak English but still have to take the standardized test scores that everyone uses to judge schools and teachers. Spend $80k in a college education for peanuts per hous compared to all the time you punt in, and teach in a bad a school where kids show up when they feel like and spend their free time gang banging rather than studying and who show up to school every day completely emtpy handed, no books, no notebooks, no pencil, nothing. I will teach the honors and A.P. while you get stuck with the bottom of the barrel kids who can’t make up an 8-year deficiency in the one year you have them. I will get the extra merit pay because all my advance students do well on the tests and you will get fired no matter how good of a teacher you or how hard you worked or how much you cared. Yes, your system sounds great. Again, where is the accountability on the students and their parents?

  • Thomas Paine

    The politicians let all these immigants, legal and illegal in who can’t speak English then blame the teachers for their poor preformance on standardized reading tests that are in English. They let illegals in this country and give them free health care and free education to the tune of 3.5 billion per year of taxpayer money that is largely sent back to Mexico and not put back into out economy. They get to stay in school for free then when the city and state run out of money they want to fire teachers, jack up class sizes and the children of honest, tax-paying parents suffer. Yes, we need to make cuts, but if CPS would have fired the three thousand teachers it wanted to last year some schools that already have 30-35 kids per class would have seen their class sizes jump to over 40 or 50 kids per class. However, on the news they only talked about raising the “average” class size to 32. So many schools are already busting at the seems. It has been estimated that the corruption tax costs taxpayers upwards of $500 million dollars. What about all the lost money from just plain bad decisions by our elected officials?

  • Gerald Spencer

    Yes, all the foul language here proves intelligence.
    The taxes should have gone up years ago, Illinois as the 32nd lowest state in the amount of taxes was extraordinary. The people in economic trouble do not need to worry about increased taxes. All of you who haven’t been touched by the recession are going to pay it and well you should.

    • Robert

      Gerald I’m not going to pay. The state can kiss my 24k a year in revenue good bye. Indy here we come!

    • excuse me

      OK, you realize that you are in the minority here right?? Just what fantasy land do you live in?? You obviously have NO clue and are a BIG part of the problem by supporting these crooks!!! Btw- I’m quite intelligent and “F” you too!!!!

  • Thomas Paine

    Also, Illinois consistently ranks 48th or 49th out of 50 states in the amount of tax money that goes to education. Don’t take my word for it; google it. It’s embarrasing to think every other state in the Union spends more money on education than we do in Illinois in terms of percentages of tax dollars. I don’t think most people would mind spending a little more on taxes if we actually got something in return rather than the money just being used to replace what was squandered, mismanaged or flat out stolen or funding public works programs like endless road construction. Ask a lot of people what happened to the money they had invested in the Illinois’ Bright Start program that was an investment tool to help parents save for their children’s college education. The fund went bankrupt under Alexi Giannoulias then he almost got elected to the Senate. Now Illinois tax payers have to bail the Bright Start system out.

  • Robert

    Are you kidding me, 9.5%!!! My company can’t move to Indianapolis fast enough. Bye Bye Downers Grove.

  • Felicia

    Here’s a novel idea– instead of taxing the people to death. why not force some of these muckety-mucks to take a 10% pay cut?

    • Dagmar

      Yep, that’s what I say and start paying taxes like all of us!! But NO, they give themself payraises!!

  • rich

    whoever that guy is in the diner, are you kidding me? how much is your sacrifice going to be? What kind of imbecile says that the politicians must know best? if they want to take the extra money from me, how about some cuts from the people (i.e., the union retirees) that my, and i repeat, my money is going to?

  • B esoina

    why don’t they stop paying welfare mom’s 100.00 extra a month everytime they another baby and they still get WIC for any child under 5 I know a lady that had 12 kids just to get the extra money plus they getting housing and they make this a way of life. we need to to tell Quinn reform welfare 2 baby’s that is all the GOV should pay for then these mom’s are offered birth control inplant or surgery because after 2 baby’s we should not have to pay for any more we pay for are own kids and if you can’t afford them don’t make other’s pay

    • tricia

      Your kidding for every dollar given to them (very little welfare clinton did away with it) Hundreds are going given to big corporations and the financial industry, but they want us to fight over the little tiny bit of money spent on welfare. Why is it the Republicans are not crying about the welfare mother???? because their are very few. This year along oil company’s paid no taxes and many received refunds I don’t know how that worked Two trillion dollars for two wars for the wealthy to make money. Cheney sent his company Halliburton to Dubi in order not to pay taxes yet we paid him Billions. So My point is Blame the wealthy for whats going on in a recession when they made record profits 2.5 trillion. . The wealthy need to pay their fair share not more tax breaks for outsourcing jobs. Communist China is now the leader thanks to Bush/Cheney.

  • ILL in IL.

    Hey Do you hear that giant sucking sound. yep that Chicago sucking all of our hard earned money for that cess pool of corruption and gimmees.

  • Jim

    Let’s get the attorney general to help us, oh wait her father is… Yup, Illinois at it’s finest. I love how Indiana is dancing in the streets with this news. There’s going to be a traffic jam out of this state! Illinois, land of the morons.

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