ABC 7 Chicago | Temporary tax increase not so temporary?
TUA President Jim Tobin was featured in a story from ABC 7 Chicago about Illinois’ “temporary” tax increase. To see the video, click on the image below, or go to the ABC 7 website here.
The Illinois House is expected to vote Tuesday on the approximately $35 billion spending plan that could lead to layoffs and further delays in paying the state’s bills
When approved three years ago, taxpayer advocate Jim Tobin suspected there was nothing temporary about the 2011 Illinois income tax increase.
“They always say it will be a temporary tax but then they try to make it permanent,” Tobin said.
“We have some temporary tax increases that are designed to pay our bills . . . to get Illinois back on fiscal sound footing,” IL Gov. Pat Quinn said in January 2011.
To resolve a budget deficit that includes $8 billion in unpaid bills, the governor and General Assembly Democrats authorized increasing the state’s income tax rates for four years: the personal rate increased from three to five percent and the corporate rate went from 7.3 to 9.5 percent.
“This is to get us out of a very deep and unpleasant hole that we happen to find ourselves today,” Rep. Barbara Flynn Currie, (D) Hyde Park, said.
“All of the income tax surcharge, over $21 billion, has gone to the pensions, government employee pensions,” Tobin said.
The 2011 bill called for the tax rates to be rolled back in 2015 to 3.75 and 7.75, respectively. But Illinois still has a deficit and a $4 billion backlog. Governor Quinn wants the rates extended to avoid devastating cuts to public education spending.
“We cannot be slashing the education budget and hurting our teachers and our students,” Gov. Quinn said.
Despite the governor’s pleas, House Speaker Michael Madigan says he cannot find the votes to extend the rates and has warned state residents to brace themselves for cuts.
Meanwhile, Tobin said Madigan could revive the tax increase extension after the fall election.
“He will push/promote the income tax increase again after the November election if enough of his allies get elected,” Tobin said.
Republican candidate for governor Bruce Rauner is opposed to extending the income tax increase, so voters can expect the question to become an issue in the fall campaign.
The state will lose just under $2 billion beginning January 1 and during the second half of the next fiscal year.
Rauner has not said what his administration would cut to make up for the loss.