SPRINGFIELD - Illinois lawmakers in January 2011 assured taxpayers a temporary increase to income taxes was all that was needed to pay off billions in overdue bills.
Now, almost four years later, lawmakers say Illinois cannot possibly survive if it loses any of the $31 billion raised through that “temporary” tax.
“The choices we have are to extend (the temporary tax increase) or to cut 13,400 teachers from the classroom, to take 95,000 children out of early childhood education, to say no to 30,000 college students wishing to get a MAP grant, to close 11 prisons and release 15,000 prisoners,” state Sen. Don Harmon, D-Oak Brook, said Tuesday.
Harmon said the only other choice is a graduated income tax that would start at 2.9 percent and end with a top rate of 6.9 percent.
Diana Rickert, a spokeswoman for the Illinois Policy Institute, said it would amount to a tax increase on anyone making more than $12,000 annually.
“Right now, state law says Illinois’ tax rate is to go to 3.75 percent next year,” Rickert said. “Supporters are going to pass off this (graduated) tax as a tax on the rich. But it is really a tax on everyone.”
Harmon’s Democratic colleagues in the Senate have been preparing doomsday budgets in anticipation of losing more than $1 billion next year.
But Republicans in the statehouse accuse the Democrats of trying to scare voters into accepting another tax increase.
“It doesn’t have to happen,” Senate GOP budget architect Matt Murphy said last week. “You put all these people through this dog-and-pony show to make it look like this has to happen to justify the tax increase that takes a week’s pay from everybody who works in this state.”
If Illinois were to stop spending — or at least stop spending as much — Murphy and Republicans say, the state could afford to roll back income taxes to the 3.75 percent rate promised in 2011.
Illinois lawmakers also are talking about extending the 2011 income tax increases, in part or in whole. There also are plans for a millionaires’ tax, a 3 percent “surcharge” on incomes topping $1 million. Talk continues in regard to expanding Illinois’ sales tax or adding a new service tax.
But there’s a wave of opposition, including small business owners who say any new taxes would hurt Illinois’ economy and drive out jobs.
Illinois, at 8.7 percent, has the second highest unemployment rate in the nation and the highest jobless rate in the Midwest.
Despite the promises and billions of dollars in new tax money, Illinois still has billions in unpaid bills.
Taxpayers may get a glimpse of how the state plans to tax them Wednesday, as part of Gov. Pat Quinn’s annual budget address.
Contact Benjamin Yount at Ben@IllinoisWatchdog.org