Bad News for Tax Reform in Illinois

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Tax reform hopes in Illinois were crushed (at least temporarily) on Sunday when the state House of Representatives rejected Governor Pat Quinn's proposal to increase the state income tax from 3 to 4.5 percent and the corporate tax from 4.8 to 5 percent in order to avoid a $7 billion budget cut. The 42-74 vote came a day after Senate Democrats led passage of a measure that would raise personal income taxes, boost the income tax from 3 to 5 percent and impose $1 billion in sales tax for the first time on many services. The House opted not to vote on the measure passed by the Senate.

Facing a midnight deadline, Illinois lawmakers instead passed a makeshift spending plan that provides for only 50 percent of the funding for state agencies laid out in Quinn's original budget and is not expected to last much more than 6 months. On Wednesday, State Senate President John Cullerton used a parliamentary maneuver to block the budget and hold it in the Senate. The action was considered mostly symbolic since Governor Quinn claims he won't sign the budget anyway because it does not solve the deficit problem.

Governor Quinn has stated before that he believes "in the tax based on the ability to pay: the income tax." Last month ITEP published its own report, agreeing with the governor's call for an income tax increase and recommending other reforms to help raise revenue and even out one of the most unfair tax systems in the nation.

Illinois lawmakers can continue this dance for only so much longer, since the budget currently in effect expires on June 30 and the state faces a deficit of $11.6 billion. Tax reform in Illinois is long overdue, but it remains to be seen whether or not lawmakers are serious about balancing the budget in time to avoid what one called an "apocalyptic series of funding cuts."

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