Ear Hustle

Illinois Residents Brace Yourselves For Income Tax Increase

Taxes are going up, debate is over how

Pat-Quinn

Our governor candidates, for now, have set aside the prairie chickens, the scary fairy tale mascots and the juvenile fake press releases.

We all know we’re in deep in Illinois and we finally have a sign from Republican governor nominee Bruce Rauner that he recognizes it, too.

We’re facing billions in unpaid bills and are carrying worst-in-the-nation pension debt. We’re not creating jobs or economic activity fast enough. And the sad conclusion is, we’re all going to pay. Our taxes are going up.

If Democratic Gov. Pat Quinn wins, he’ll push for making the 5 percent income tax rate permanent. If Rauner wins, he’ll push for sales taxes on services and take his four-year term to bring down the income tax rate to the 3 percent mark, where it was before Democrats raised it.

The income tax rate is set to drop to 3.75 percent in January, but that could change after the election with a push from Quinn or Rauner. The Rauner camp offered up its most specific plans for taxes and economic policy, but still repeatedly refused to offer any further details as to what they intend to do or when, beyond pledging a 3 percent personal income tax rate by 2019.

It’s not a stretch, then, to speculate Rauner might support raising the 3.75 percent rate before dropping it over four years. Tax pain is going up for us all as it must to dig us out of Illinois’ deep hole. Rauner’s plan to tax services will raise about $600 million, not nearly the billions needed to cover the planned rate drop.

It’s refreshing to see Rauner offer some reality and in-depth ideas about addressing our financial crisis. He defied GOP convention by proposing to raise some taxes and by considering raising the minimum wage. His plan to move to taxing services and goods, as many other states do, probably should have been done years ago as we shifted to a service-sector economy, but the industries affected fought that and will again. It’ll be a battle to get approval to tax things like storage, travel agencies, lawyer fees, graphic design, property rentals and golf club memberships, to name a few.

It will be all-out war to freeze local property taxes as Rauner also proposed. Let’s be real where Rauner wasn’t: A property tax freeze likely won’t pass the Legislature, nor should it. Voters need to face that and factor it into their decision about this governor’s race.

The bulk of property taxes go to schools. No doubt waste can be found in schools and every government, but requiring voters to OK property tax increases every time a school district needs to spend more money would cripple them. Governments that already have to seek voter approval for tax increases rarely win. Still, few of us are willing to give up bus service for schoolchildren or garbage pickup. Local governments face the same pension crisis the state faces. Hog-tying their ability to raise funds is not an answer.

Don’t get me wrong. I don’t favor a blank check for local governments, but a property tax freeze is poll-tested politics. It’s sugar to help the tax increase medicine go down with voters.

Still, now we have some clear choices for our future. Quinn would make permanent a 5 percent income tax. Rauner would take four years to drop it to 3 percent, while shifting to a services-dominated sales tax.

Tax increases either way, but divergent approaches to taxes, spending and economic growth that give us a serious governor’s campaign worthy of our study. Finally.

Source: Chicago SunTimes

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