Rep. Mike Smith's (D-Canton) legislation to double the state income tax -- HJRCA 42 -- is being debated currently in the Illinois House. More . . . the income tax increase will take place for those who file singly or jointly and claim $250,000 income.
Tune in to the discussion here. Capitol switchboard number is 217 782 2000.
UPDATE 3:25 PM: HJRCA 42 vote taken, 52 for, 60 against. Amendment fails.
All Republicans voted no, joined by 13 Democrats. Smith needed a 3/5 majority to pass. 48 "no" votes were required to defeat the proposal.
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UPDATES: Rep. Mark Beaubien (R-Barrington) points out that the income tax will include home sales profits on homes over $500,000.
Rep. Dave Winters (R-Rockford) points out value of continuing flat tax over Smith's double of income tax for those over $250,000 -- moving from a flat tax to a progressive tax system.
Rep. Bob Pritchard (R-Sycamore) says he's concerned about Rep. Smith's comment that HJRCA 42 is the "least painful" way of dealing with the need for more state revenue.
Smith's bill specifies what these funds will be used for and it's not to catch up on the $100 billion we're behind on pension payments or the $2 billion we're behind in making Medicaid payments to hospitals, doctors and pharmacies.
Rep. John Bradley (D-Marion) points out that 3 out of the last 5 governor's budgets were bi-partisan, something from which Republicans "can't run" and "can't hide." Bradley says "If you vote against [Smith's bill], you vote against 95% of the people of Illinois," "you vote against a capital program," and against "tax relief for the middle class."
Rep. Mike Tryon (R-Crystal Lake) says this constitutional amendment does not assure the funding will go to education as Smith indicated it would. In reality, where the money would go would be left to the legislature to decide. "That's scares me," Tryon replied.
"You know this won't pass," Rep. Bill Black (R-Danville) said. "This is what happens when other things can't be done."
"The idea is 'Let's soak the rich,'" Black said. "This is class warfare. . . I've seen it resort to this time and time again -- it's counterproductive, its destructive." The 100,000 wealthiest citizens won't pay the increase, he said, they will defer income, change legal residence or change business set up. "This is to get a roll call to use," he said.
Rep. Bob Molaro (D-Chicago) says "Let's get some money in the state, let's get moving," in support of the income tax increase. To the Republicans, "If you don't like this bill, then suggest your own revenue enhancements . . ."
Rep. Jim Durkin (R-Countryside) asked if someone gets a lawsuit settlement that puts persons in the higher income, they would need to pay higher income tax.
Creates a higher tax on retirees who are selling their homes, small businesses and farmers, a new marriage penalty tax, said Rep. Chapin Rose (R-Champaign). "This hands the governor a pile of money to spend."
Rep. Paul Froehlich (D-Schaumburg) said the Republicans say the Smith amendment fails to give property tax relief, balance the budget, fails to address the pension fund or Medicaid fund. "They'd be right," he said, "but he addresses several problems: the Smith amendment would fund the capital budget; it addresses the disparity in spending between the poor districts and the wealthy; we're doing tax reform. We're alleviating regressivity in our system. The reality is the system we have soaks the poor -- this is tax relief. If it goes on the ballot, we would have public input. . ."
"How long, O Lord, can we wait?" as Rep. Mike Boland (D) voiced his support for the income tax increase. He encouraged the wealthy to give more to charity if they want to avoid the $250,000 level, forcing them to pay the higher income tax rate.
Rep. Black corrected Boland immediately, saying charitable donations do not make a difference to the amount of state income taxes paid.
Rep. Rosemary Mulligan (R-Park Ridge) said the debate about raising the state income tax matched with the recall effort, two issues to add to others constructed to divert the public's attention away from the fact that the General Assembly doesn't do what it is sent to Springfield to do. These are added to "abortion, gay rights and gun rights," Mulligan said, when the legislature can't get other jobs done.
Rep. Roger Eddy (R-Hutsonville) said the amendment would never move forward as it is, because it is too "flawed." "Let's get real, this is for a roll call," he said.
Rep. Randy Ramey (R-West Chicago) asked how many would vote to raise taxes on themselves. Rep. Smith said 107,000 would be eligible. How many would vote to raise taxes on others? Four or five million who don't qualify for the $250,000 level would be asked to support raising the taxes for others. "Is that fair?" Ramey asked.
Is the money raised for education in addition to or replace the current education funding, Ramey asked. "That is not in this legislation," Smith said.
House Speaker Mike Madigan (D-Chicago) then rose to address the amendment. "If this amendment were to be sent to the people, it would change the tax structure for the state. This does not relate to budget making," he said.
"I heard numerous questions about budget," he said. "You don't get a guarantee of where the money will be spent in the constitution. What we've provided is that there will be a newly-created fund for education. The legislature will decide how it is distributed."
Then he got political. "It was 'accurately pointed out' both political parties participated in three of the last five budgets," Madigan said. "If you're looking to blame for mismanagement or spending, don't look too far beyond the end of your own noses."
"It's easy to think of reasons to be against legislation. Let's step back and look for what this would do: provide greatest tax relief in the history of Illinois. It would relate to tax relief for 90% of Illinois taxpayers." The amendment would increase the personal exemption for state income tax from $2000 to $4500, and increase with inflation. "All would happen automatically, pursuant to the Constitution. This would not related to revenue taken in, it would be in the Constitution.
"It would be enforcable, an automatic flow of money to education and a portion for a construction program," Madigan said. "This takes the decision to the people -- they decide.
"This is an idea -- tax relief, new money, decided by the people...when did we become afraid to let the people make the decision? I forget . . . " the Speaker said.
Smith let the Speaker's remarks stand as closing, and called for a vote.
52 voted yes, 60 voted no. Smith's amendment failed.
