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Illinoisans to pay higher income taxes

Gov. Quinn hinted during his Wednesday news conference that Wall Street credit rating firms pushed for higher taxes. We have video of his statement from Blueroomstream.com.
Kay Shipman 
Published: Jan 14, 2011
Illinois will have higher personal and corporate income taxes and a reinstated state estate tax with a $2 million exemption as a result of legislation passed by the lame-duck General Assembly session and signed by Gov. Pat Quinn.

Illinois Farm Bureau opposed SB 2505, which proposed the tax increases and other funding changes. IFB had sought state spending reductions and opposed decoupling of the state estate tax from the federal estate tax.

“We were disappointed the package didn’t address accountability and reform to turn around our situation” said Illinois Farm Bureau President Philip Nelson.

“We also were very disappointed that in the 11th hour the tax proposal added decoupling of the state’s estate tax. We worked hard to bring about changes on the federal level and were optimistic that the State of Illinois would stay coupled with the federal level. (The federal estate tax recently was reinstituted with a $5 million exemption.)

“The passage of SB 2505 definitely hurts efforts by the Vision for Illinois Agriculture and others to turn around the business climate in this state,” Nelson said. “We will monitor closely the implementation of the revenues, what they are used for, and whether state spending falls under the spending caps established.”

SB 2505 passed with a 60-57 vote in the House and a 30-29 vote in the Senate.

The personal income tax will increase from 3 percent to 5 percent from 2011 through 2014 and then gradually decrease to 3.25 percent by 2025. In a similar manner, the corporate income tax will increase from 4.8 percent to 7 percent through 2014 and then gradually decrease to 4.8 percent by 2025.

In tandem with the income tax hikes, lawmakers established annual spending caps for the first four years of the increases, according to Semlow. If state spending exceeds the caps for any fiscal year, the personal income tax rate will go back to 3 percent with the corporate rate returning to 4.8 percent.

In the legislation, the Illinois auditor general was given broad powers to collect information from state agencies and to serve in a fiscal watchdog role. There are provisions to correct spending levels, including the holding of funds in reserve to correct spending levels before tax rates are reduced.

Lawmakers chose to leave the current 5 percent residential property tax credit on the state income tax vs. changing it to a flat $325 per residence proposal that they had considered.

The decoupling of the state estate tax from the federal estate tax essentially means the state will again implement provisions that were in place from 2001 to 2009. The legislation resurrects a $2 million exemption with the same previous rates.

That is a major reversal from a little more than a year ago.

On Jan. 1, 2010, the state “death tax” was re-coupled automatically to the federal level because of a state law that took effect in 2003, said Kevin Semlow, Illinois Farm Bureau director of state legislation. The estate tax on both the federal and state levels was 0 percent for 2010, Semlow added.

Lawmakers failed to authorize the state to borrow $8.75 billion to pay overdue bills. Supporters were unable to secure the 71 House votes needed for a super majority that is required for bond authorizations, Semlow said.


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Re-Call Quinn. NOW!
Posted by Dan-O on January 15 at 8:05 PM
 
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