Mike Klein Online

Illinois Tries Higher Income Taxes to Reduce Budget Bloodbath

Mike Klein

Want to fix your state budget problems?  Georgia and Illinois have different ideas about that.  Last week the Georgia Special Council on Tax Reform and Fairness proposed lower personal and corporate income tax rates.  Last night the Illinois Senate and House passed massive tax increases.

Working past midnight, Illinois’ Democratic majority legislators passed bills that will increase personal income taxes from 3% to 5% and corporate taxes increase from 4.9% to 7%.  No Republicans voted in favor of the taxes.  Increases would take effect immediately after the legislation is signed by the Pat Quinn, the state’s Democratic governor.

Here’s what Illinois gets by increasing the tax rates:  It expects to cover $6 billion of the state’s annual budget deficit which is approaching $15 billion this year.  That leaves a nifty $9 billion uncovered.  The tax hikes will sunset after four years unless they are extended by the state legislature.

By contrast, the Georgia proposal would reduce personal and corporate income tax rates from a current 6% to 5% in the 2012 calendar year, 4.5% in 2013 and 4% starting January 1, 2014.  The Georgia proposal would change the sales tax structure, in particular, state sales tax on groceries could be reimposed as early as July 1, 2011.

Read more about what Illinois legislatures did overnight on Illinois Statehouse News Online: http://illinois.statehousenewsonline.com/4897/legislature-passes-tax-hike/

And be glad you do not live in Illinois!

Mike Klein is Editor at the Georgia Public Foundation.

January 12, 2011 - Posted by | Uncategorized | , , , ,

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