U Of I Report: Tax Hike Won’t Fix State Deficit
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SPRINGFIELD, Ill. (WBBM) – A new report from the University of Illinois on Wednesday said that the income tax hike recently approved by Gov. Pat Quinn and the General Assembly is not enough of a solution to the state’s $15 billion deficit.
As part of the Fiscal Futures Project from the university’s Institute of Government and Public Affairs, the report said that the increases – two percentage points for individuals and 2.2 percentage points for corporations – will not fully solve the deficit problems.
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“We estimate that the structural deficit, the difference between what we spend and what we raise in continuing revenues, is $11 billion in fiscal year 2011, and this tax increase raises only less than $4 billion in 2011,” says IGPA associate director David Merriman. “In the following year it raises more than that, over $7 billion, but it’s still not enough to close the deficit.”
Merriman says the state’s modus operandi appears to be to slap something together at the last minute, as opposed to having a comprehensive plan. Merriman says some ideas which have not gotten a thorough hearing here, but which are in use in other states, include taxing retirement income and broadening the sales tax base.