Democrats push 75% increase on state income tax

They don't know the words "reduce government". - Spy on America.

Gov. Pat Quinn and top Democratic lawmakers reached a tentative agreement Thursday on a major, post-election income-tax increase and a $1-a-pack cigarette-tax hike to stabilize the state budget and provide a cash infusion for schools.

The plan, detailed by Senate President John Cullerton following closed-door meetings with the governor and House Speaker Michael Madigan, still faces a review by rank-and-file members of the Democratic-led legislature in the waning days of a lame-duck session.Under the proposal, the state's 3 percent personal income-tax rate would rise to 5.25 percent for four years, then fall to 3.75 percent. All told, that's a 75 percent increase.The personal income-tax hike is expected to net the state roughly $6.2 billion, and a corresponding corporate income tax increase could raise an additional $1 billion, Cullerton said. The rate businesses pay would temporarily jump from 4.8 percent to 8.4 percent.

The cigarette tax increase, which is expected to raise $377 million, would go into what was described as a "lock box" to increase education funding. Lawmakers said they hoped to double that amount using other funds to provide more than $700 million in new school funding this spring.

To gain votes for the package, the plan also would provide $325 in property tax credits to homeowners this year and a direct check to taxpayers in subsequent years.As a measure of how desperate state government's finances are, Cullerton said the state would use the income-tax hike to borrow $12.2 billion. Of that, $8.5 billion would pay overdue bills and $3.7 billion would cover a government worker pension payment lawmakers skipped when putting together the current budget, he said."I think it's the right time to do it because we are in desperate need of paying our bills," Cullerton said. "Just think about how we're going to be after we pass this. We would have all our bills, all those people that are owed money, $8 billion would go back into the economy. People will be paid on time. Our credit rating will be dramatically improved."The proposal still could be changed slightly as lawmakers pore over the finer points, Cullerton added.

The first vote on the tax package will be in the House, but lawmakers were left guessing whether the legislation would be ready to consider by Friday or, failing that, when they return Sunday."I think it will pass the Senate, but it has to pass the House first," Cullerton said.Madigan declined comment, but spokesman Steve Brown said "things are progressing, but I'm not prepared to offer any details at this time, and I certainly wouldn't predict when there might be a vote."Quinn is to be sworn in to a four-year term Monday, two days before the legislative session ends and the reset button is hit as the new General Assembly is seated. The Senate returns Monday, and could send Quinn the tax hike only hours after he takes the oath of office, leaving him largely in a take-it-or-leave-it position.Almost from the day he took over from the ousted Rod Blagojevich in early 2009, Quinn has called for an income tax increase to right the state's books. He campaigned on the proposal that the state should raise the personal income tax to 4 percent from 3 percent. Though Quinn won with only 47 percent of the vote, he declared his victory a "mandate" to raise taxes.

Last summer, Quinn's budget director predicted in an interview that Illinois would raise the state income tax rate from 3 percent to 5 percent in early January. The governor admonished the aide for speaking out of turn and suggested David Vaught's comments were misunderstood by an out-of-state reporter.

Now lawmakers are considering a tax hike that's even higher.Senate Republican leader Christine Radogno of Lemont called it "dishonest" for Quinn to consider an income tax hike that's more than twice as much as he embraced during the campaign."To me, that's kind of a bait and switch, and I think it's wrong, and it's wrong to do it in a lame-duck session," Radogno said.Quinn released a statement saying he's working with Cullerton and Madigan to "build framework that works".


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