Need for Tax Increase Becomes Increasingly Obvious in Illinois

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Illinois Governor Pat Quinn reminded Illinoisans this week of the need for a tax increase by previewing a drastically reduced spending plan that would cut deeply into education, public safety, and human services while still failing to fill the state’s budget gap.  On Wednesday, Governor Quinn made clear that he plans to again push for a state income tax increase, though he has promised to make some refinements to the version he advocated last year.

During the FY10 budget debates last year, the Governor attempted to secure support for a progressive tax hike that would raise the state’s flat income tax rate while also increasing the personal exemption.  This plan represented a fair and practical solution, given the state’s constitutional restrictions on levying a graduated rate income tax.  While the Senate did pass a bill that both raised the state’s income tax and expanded the sales tax base, the push for tax reform died in the Illinois House where lawmakers insisted on using spending cuts and borrowing to ease the state’s budget shortfall.

But the lack of sustainable tax increases last year has only made Illinois’ current budget situation that much worse.  Illinois now has what is perhaps the worst fiscal situation of any state in the entire country.  As Ralph Martire of the Center for Tax and Budget Accountability put it earlier this week, "Any elected official or candidate who says you can solve this without a tax increase is either incredibly math-impaired or intentionally deceiving voters."

Given the dire situation of the Illinois budget, even the Civic Federation, a traditionally anti-tax, business-oriented group, has recently come to acknowledge the absolute necessity of raising the state’s individual and corporate income taxes.  While the group still considers such increases “distasteful,” it has finally realized, as have many Illinoisans, that the spending cuts alone cannot fix the state’s problems.

For more on tax reform in Illinois, be sure to read this recent ITEP report examining both short- and long-term strategies for improving the Illinois tax system.

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