Tax hikes are on state agenda

Tax hikes are on state agenda

Increasing state income taxes will be a big issue in Springfield this coming year.

It's inevitable, and perhaps understandable, that candidates for public office try to keep their thoughts about higher taxes to themselves in the midst of a political campaign.

But no one should be fooled by Gov. Pat Quinn's silence about the fate of a temporary increase in the state income tax that is scheduled to expire in January 2015.

He and his fellow Democrats and many Republicans will almost assuredly support an extension of the supposedly temporary hike. The only real question is whether they intend to make the 2011 increase to a 5 percent income tax rate permanent and when they'll do it — perhaps in another lame-duck, post-election session.

The political reality is that the vast majority of our elected officials in Springfield, no matter what their party, can't bear to cut spending. That's why, when push comes to show, they usually opt for higher taxes.

Here's the background: During the January 2011 lame-duck session shortly after the 2010 general election, Gov. Quinn and legislators boosted the state income tax by 66 percent — from 3 to 5 percent. To make it more palatable to tax-weary voters, they made part of the increase — 1.25 percent — temporary and scheduled it to expire in January 2015.

That means the state income tax is scheduled to fall back to 3.75 percent in January 2015 if it is not extended by Quinn and the Legislature.

The reality, of course, is that like most other temporary tax increases, it almost assuredly will become permanent. Another reality is that those who promised it would be temporary weren't telling the truth.

But 2015 is drawing ever closer, and legislators will face the issue during the coming year that includes a primary election in March and a general election in November. Some candidates will try to make the extension of the temporary income tax increase an issue, and Quinn is doing the best he can to avoid publicly embracing the extension that he privately supports.

He won't say he's backing an extension of the tax increase. He might even deny it. But how could that possibly be true?

Quinn supported the original increase, going so far as to provide well-paying jobs to defeated or retiring legislators who said they were opposed but not so opposed they wouldn't vote in favor of a tax hike exchange for a state job.

If the temporary income tax was allowed to expire, it would reduce state revenues by an estimated $2 billion in the following budget year and $4 billion in the year after that. Spendthrift state officials couldn't take that.

So it's clear where Illinois is headed. What's not clear is how it'll get there.

There's another tax issue that'll be hanging over the heads of voters when legislators resume their work — a proposed constitutional amendment that would allow a graduated state income tax.

The Illinois Constitution requires a flat income tax. But revenue-hungry legislators figure they can raise more revenue if they are allowed to levy higher rates of taxation as incomes rise. So some have suggested that voters should be asked to approved a graduated income tax plan.

This, too, is another method of raising income taxes on almost everyone. Supporters of the proposal will deny it, but higher rates of taxation on low levels of income is standard practice in states that have a graduated income tax.

One more thing: Those who were paying attention might recall that the 2011 state income tax increase was justified by many legislators as necessary to pay the state's old bills. State Treasurer Judy Baar Topinka reported this week that the state will close out the year owing $7.6 billion in unpaid bills, a 15 percent decline from last year.

So 2014 is shaping up as a tough year for taxpayers. With two separate tax plans pending — the extension of the temporary increase and a proposed constitutional amendment allowing a graduated income tax — voters need to be on their guard, particularly when politicians say they don't have a position or won't say what it is.

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Sid Saltfork wrote on January 02, 2014 at 1:01 pm

It will not affect the corporations who bought, and blackmailed for corporate welfare through tax breaks.  Sears, CME, and ADM will not have to worry about tax increases.  How about "reforming" the tax breaks before raising taxes on the common guy?  Oh...that would not work because the common guy does not give enough in "campaign donations" (bribes).