Illinois Gov. Pat Quinn (D) and the Democratic leadership in the legislature Friday put forth a tax hike plan to help fill in the state's $15 billion budget deficit. Among the proposals are a 75 percent personal income tax increase, as well as a huge hike in the corporate tax rate, and a doubling of the state's cigarette tax.
The following statements can be quoted for attribution, and the Heartland experts can also be reached for more comment at the contact information below.
Steve Stanek, a research fellow for budget and tax issues at The Heartland Institute and a life-long Illinois resident:
"Illinois lawmakers apparently will do anything except the one thing that would actually fix the state's budget – control spending.
"This state used to have no income tax, period. The income tax was enacted a little more than 40 years ago to solve budget problems. Then it was "temporarily" increased with a surcharge. Then the surcharge was made permanent. In addition, lawmakers have repeatedly raised dozens of other taxes, fees, and fines over the years. None of this has fixed the budget because no matter how much revenue the state brings in, lawmakers spend it all and more.
"We can expect the same thing to happen if the tax deal becomes law. The state will see more revenue, its budget situation will improve, and before long lawmakers and special interests that benefit from state spending will use that as an excuse for more spending. We'll again see budget problems.
"The tax hike will take money away from citizens and businesses, which means we'll have less money to spend and invest. The result will be Illinois businesses with fewer customers, or customers who spend less, and workers who will continue to struggle to find jobs or hang onto the ones they have because there will be less business investment."
The Heartland Institute
John Nothdurft, director of government relations, The Heartland Institute:
"Currently Illinois’ low, flat-rate 3 percent income tax is one of the state’s tax code’s lone competitive advantages. The idea that Gov. Quinn and the legislature wants to destroy that advantage on the eve of economic recovery in the state is utterly reckless. Not only that but the legislature is considering making Illinois’ combined national-local corporate income tax the highest in the industrialized world.
"How can anyone realistically believe that this is sound fiscal policy? These proposals will make it harder for the state to attract businesses and make it harder for existing businesses in Illinois to compete with their competitors.
"Until Illinois starts pushing forward on implementing comprehensive tax and expenditure limits and tacking real pension reform, the state’s economy will continue to slow and neighboring states like Indiana will be able speed past them."
Director of Government Relations
The Heartland Institute
The Heartland Institute is a 26-year-old national nonprofit organization based in Chicago. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site at http://www.heartland.org or call 312/377-4000.