By Greg Bishop/Illinois Radio Network
SPRINGFIELD – Democrats in an Illinois House committee are OK with their Senate colleague’s plan to raise taxes by $5.4 billion, but Republicans say the increase is far too great and the state should focus on getting more revenue through economic growth.
Along party lines, the House Revenue and Finance Committee passed Senate Bill 9, a group of $5.4 billion in tax increases, on to the full House. A floor vote is expected Tuesday.
The bill passed by the Senate last week would increase the current individual income tax rate from 3.75 to 4.95 percent, retroactive to Jan. 1. That would make the actual rate for the rest of 2017 nearly 6 percent, if not more depending on when it goes into effect.
“My concern here is that it is retroactive and you are reaching back and it’s a fairly significant increase for which you are reaching back,” State Rep. David Harris, R-Arlington Heights, said.
Rep. David McSweeney, R-Barrington Hills, said the average Illinois family would pay $2,400 more in taxes over the next four years.
Rep. Robert Martwick, D-Jefferson Park, said the increase is necessary to plug a state services funding gap.
“I might suggest that the middle class family would be better off paying $600 a year in more taxes than suffer through some of the cuts that have been proposed in an effort balance our budget,” Martwick said.
Because of mandated spending that can be amended by lawmakers, the state is on course to spend $40 billion this year. But a bipartisan government forecasting group says Illinois is barely bringing in $32 billion.
State Rep. Mark Batinick, R-Plainfield, said the budget gap is concerning, but “one of the things you don’t hear about in Illinois very much is increased revenue through growth. And I know that if we had just been on average growth, we wouldn’t have the gap that we have right now.”
Martwick noted Illinois’ flat income tax is among the lowest rates in the country, but Batinick said considering local property taxes, which are among the highest in the country, Illinois taxpayers have the highest overall tax burden in the country.
Gov. Bruce Rauner has been pushing for a property tax freeze and reforms to the state’s business climate to bring more jobs to Illinois, but Democrats contend his proposed reforms would hurt middle class families.
The proposed tax increase legislation also would raise the corporate tax rate from 5 percent to 7 percent, making the effective rate for the rest of the year even higher.
“You’re doing a massive tax increase on individuals, LLCs who really actually file under the individual rate, and corporations,” state Rep. Jeanne Ives, R-Wheaton, said. “You’re essentially going to give us the highest corporate tax rate in the United States, and that’s not good for business.”
Ives also asked about the status of the House revenue estimate resolution. That’s the measure that dictates how much revenue is expected and in turn how much the state can spend. Democrats said it’s stuck in the House Rules Committee.
SB9 does does contain some various tax credits but also a slew of service taxes, including different rates for cable, streaming and satellite services. Supporters of the measure are looking to amend it to remove service taxes on satellite companies after constitutional questions were raised about taxing similar industries at different rates.
The tax hike legislation is expected to be voted on by the House on Tuesday.
Lawmakers have until Wednesday at midnight to pass legislation with simple majorities.
