SPRINGFIELD - Illinois taxpayers that have been paying 67 percent more on state income tax for the past three years may not only have their hopes of returning back to the 3 percent rate in 2015, but House Speaker Mike Madigan's taxpayer reform plan may end up costing them even more.
Thursday, Speaker Madigan introduced to the Illinois House his proposal to present a Constitutional amendment to voters in November that would move Illinois from its current flat tax system to one that would increase taxes as the individual taxpayer's income grew.
While Madigan focused attention on the highest tax percentages hitting those making over a million dollars a year, the proposal will hit small business owners.
Republican State Rep. David McSweeney (Barrington) said Madigan's proposal would drive more jobs and businesses out of Illinois.
“This tax increase proposal is bad for Illinois and continues our shameful tradition of punishing job creators,” McSweeney said. “It seems that the some people aren’t satisfied with Illinois’ embarrassing rate of out-migration, they want to amend the Constitution to drive even more employers out of the state.
"Make no mistake about this job killing legislation - it would hurt small businesses owners that pay taxes at the individual income tax rate. Many small businesses, which account for 80% of new jobs in Illinois, are set up as Subchaper S, Limited Liability Companies or partnerships and pay taxes at the individual rate.”
Madigan's proposal would punish job creators, Americans for Prosperity-Illinois' executive director David From said.
“With the second highest unemployment rate in the nation, one would think the Democrat leaders of Illinois would want to grow jobs for our families," From said. "Unfortunately, yet again they choose to pursue policies that will push more jobs out of the Land of Lincoln by punishing job creators."
"This new tax is designed to further polarize the state in a bid for short-term political gain, while diverting attention from the majority’s intention to go back on its commitment to keep the 67% tax hike permanent.”
Under current law, Illinoisans are scheduled for see tax relief in 2015 when the state income tax rate is slated to drop to 3.75 percent from the current rate of 5 percent. Illinois Policy Institute's Kristina Rasmussen said Madigan and the Democrats misspent the funds raised by the hike they promised was temporary.
'In 2011, Madigan and the Democrats in Springfield raised taxes, promised the tax increase would be temporary, and that it would help pay off an $8 billion backlog of unpaid bills, get Illinois back on sound fiscal footing and make sure the state has a strong economy," Rasmussen said in a statement.
"According to our latest report, by the time the tax increase sunsets in January 2015 it will have generated more than $31 billion in additional tax revenue. Yet Madigan and Springfield politicians are still crying poor. And worst of all, Illinois still has a $7 billion backlog of bills, the worst credit rating in the nation and the highest unemployment rate in the Midwest."
Madigan's proposal, HJRCA 51, which would add the 3 percent surcharge, claims to help fund public education. McSweeney pointed out that similar promises were made when the state lottery was introduced.
“What politicians ultimately did was use the new revenue as a substitute, rather than a supplement, leaving education funding levels where they were, and making off with the extra revenue for more government spending,” McSweeney said. “The people of Illinois won’t fall for that same old deception again.”
In order to become law, the amendment would need to pass by super-majority votes in both the House and Senate, then be approved by voters on the November ballot.