Illinois faces 66% tax hike

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SPRINGFIELD, Ill. —
Saying Illinois was facing "a fiscal emergency," Gov. Pat Quinn said Wednesday he supports the plan passed by the Illinois General Assembly to raise the state's personal income tax rate by 67 percent and business income tax rate by 46 percent.

The legislature dropped the proposed $1 increase on a pack of cigarettes.

Senate President John Cullerton, a Chicago Democrat, said in a statement, "This is a crucial step to owning up to our responsibilities and commitments with those who do business with Illinois."

Earlier in the night the House passed the bill without a single Republican vote.

This morning around 1:30 a.m. the Senate took up the bill and voted 30-29 in favor of the bill.

Under the billt the current 3 percent personal income tax rate goes up to 5 percent until 2015, when it would drop to 3.75 percent.

Lawmakers compromised on the plan allowing the tax rate to lower in 2025 to 3.25 percent.

A family or individual making $40,000 a year, the increase would amount to an extra $800.

For businesses, the rate now at 4.8 percent would go up to 7 percent until 2015, and then would drop to 5.25 percent.

The increases begin immediately and are retrocactive to the beginning of the year. Proponents said it would raise close to $6.5 billion the first year.

The news made national headlines because the state's deficit was close to $15-billion, and this increase is expected to cut that in half. Overdue bills to various agencies and programs amounted close to $8 billion.

Lawmakers said the measure would also attempt to limit spending every year until 2015. The figures given were $36.8 billion in 2012, $37.5 billion in 2013, $38.3 billion in 2014 and $39 billion in 2015. If the governor and lawmakers exceed the limits they would be audited.

Republicans reacted quickly to passage of the bill. A statement from Illinois Republican Party Chairman Pat Brady said, "This is clearly Mike Madigan's baby, only it will be our children and grandchildren who'll have to pay for Madigan's and the Democrats's irresponsible actions and assault on taxpayers."
 
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