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The Illinois House passed a massive income-tax increase Tuesday to help the state dig out of a $13 billion deficit, despite opposition from Republicans and business groups.

The measure passed by a vote of 60-57. The state Senate approved the measure early Wednesday morning. A new legislature, with narrower Democratic majorities in both houses, will be sworn in at noon Wednesday.

Among the increases in the bill, the individual income-tax rate would jump to 5% from 3%. That would cost a family of three making $60,000 about $1,080 more each year in income taxes, according to figures from the Illinois Policy Institute, a nonpartisan free-market think tank. The corporate tax would rise to 7% from 4.8%.

Gov. Pat Quinn came to the House floor to shake hands and congratulate lawmakers after the vote. He is expected to sign the bill Wednesday.

Proponents said the bill was necessary to forestall a wave of public and private defaults, layoffs and foreclosures if the state didn't start paying its bills.

"The wolf is at the door, ladies and gentlemen," said Democratic Rep. Greg Harris.

But the leadership failed to win over some rank-and-file members or a single member of the Republican minority, who said the measure would hurt economic growth and working families. Opponents also objected to a spending provision within the bill that would hold growth to 2% a year, arguing the state needs actual cuts.

"We're not taking responsibility for our irresponsibility," said Republican Rep. Roger Eddy. "We're saying to the people of Illinois we're making up for our mistakes on your back."

Illinois is one of few states considering a big income-tax increase to address budget woes. In California, Gov. Jerry Brown, a Democrat, proposed Monday to close the state's $25 billion budget shortfall by making steep service cuts and extending temporary increases on sales and income taxes.

Many Republican and Democratic governors across the U.S. have said they wouldn't support significant income-tax increases amid high unemployment and a weak, albeit recovering, economy, said Ron Snell, senior fellow with the National Conference of State Legislatures.

That means lawmakers will likely turn to budget cuts, amid dwindling federal funds, growing Medicaid costs and state revenues that are increasing at a sluggish pace. "This is going to be the hardest budget to put together of any since the recession began" for state lawmakers nationwide, Mr. Snell said.

Illinois, like many other states, saw its revenue fall sharply during the recession, and its economic recovery has been modest. But for years, the state has avoided tax increases or significant budget cuts by covering its deficits with short-term measures, putting off bills and paying less than is recommended into the state's pension fund.

The state's debt exploded in 2003, under then-Gov. Rod Blagojevich, when Illinois sold $10 billion in 30-year bonds to shore up pension systems and reduce the deficit.

Today, lawmakers are scrambling to dig out of a hole that equals half of the general-fund budget of $26 billion.

"What we have to do is pay our bills," said state Senate President John Cullerton, a Democrat. "That's a huge, important part of our national image as well as important to our economy. We also have to make sure our bond rating is improved."

The bill would scale back tax increases if the state breaches certain spending limits.

Two separate measures that were part of the overall package failed to win support: A measure to raise the tax on cigarettes and a bill to authorize borrowing $3.7 billion to make a pension payment, as well as plans to issue roughly $8.5 billion in debt to pay down past-due bills. The state has an enormous backlog in overdue payments to hospitals, social-service agencies and others.

Republicans and business advocates voiced their opposition.

"Illinois has been an economic boon to Florida," said Collin Hitt director of policy for the Illinois Policy Institute. "Through a slow drip, we've lost thousands of taxpayers. If this bill passes, it will probably burst the pipes."

Lawmakers are also working to keep the state's bond rating from deteriorating even further.

Frank Mautino, assistant majority leader in the House said Tuesday that credit-rating agency Moody's Investors Service sent a letter suggesting the state's bond rating could fall further if there's no progress on the bill.

A spokesman for Moody's said: "We have communications with issuers to understand the status of their initiatives that have credit implications."

Municipal bond market participants remained skeptical Tuesday that Illinois would handle its budget problems.

19,476 Posts
A couple facts not mentioned in the article...

This bill was passed by the LAME DUCK congress in the early AM hours on Tuesday. The Senate approved the tax increases on a close 30-29 vote at 1:20 AM-CST, just hours before the new, Republican controlled, House of Representatives took office. Last minute bull ****. :down:

In addition to increasing the individaul and corporate income tax, they also increased by 1% the state expense allowance for the Gov. Not only did they raise taxes, they also increased expenditures! :crazy:

They also abolished the IL state death penalty in the same hours.

Illinois and Libs at their finest.

1,039 Posts
Illinoisans finally have to pay for their big government. Soon all Americans will - liberalism costs money.

31,366 Posts
:laughing: Michigan, Illinois, NY, none of them are gonna pay their way out of the mess their liberals created. They are all gonna default, just like Kommiefornia. Hell, they aren't even talking about the billions already owed to the federal government, which has big interest payments coming due this year. You add their budget woes, their tax woes, their unfriendly business climates, pension woes and now interest payment woes, they are all screwed. All that can be done now is to get the hell out of those states before the pop.


BTW, anyone notice the housing market lately? Ouch... this isn't gonna be a double dip, it's gonna be the final dip.

DC Crew
3,083 Posts

property taxes
fuel taxes [ running 3 cars ] plus chicago adds a tax
home heating fuel tax plus chicago adds a tax
water bill [ yes we pay for water a chicago tax]
food buying state and yes a chicago tax
beer & 100 proof stuff both taxes
a chicago sticker for 3 cars I think $79 or $98.00 each
state plates for 3 cars forgot maybe $100.00 each I get one 1/2 price because I am old
if you buy candy or soda pop a chicago SIN TAX
go to a movie all kinds of taxes
smokes [ I never smoked ] but a pack is over $10.00 a pack because of the SIN TAXES

I could go on and on but thats enough yes my state and city is all about what thy can get from us > but all services that we should get . never do .we have a water pipe broke water frozen a foot deep I called 3 times in the past 3 weeks but not fixed yet. its 3 houses from mine **
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