Income Tax Increase Would Cost Typical Taxpayer $1,100SPRINGFIELD, Ill. (AP) - The temporary income tax hike Illinois lawmakers are considering extending is costing the typical taxpayer about $1,100 more this year, according to calculations by the Governor's Office of Management and Budget.
The 67 percent increase on individuals approved in 2011 is producing about $6.6 billion in additional revenue for the state this year. Democrats promised when they raised the individual rate from 3 percent to 5 percent that it would roll back to 3.75 percent in January 2015. Now Gov. Pat Quinn and legislative Democrats want to make the 5 percent rate permanent.
Here is a look at the increase by the numbers:
- Number of Illinois taxpayers: 5.99 million
- Average taxable income: $55,000
- 2014 average state tax liability at 5 percent: $2,750
- Average liability at 3 percent rate: $1,650
- Average liability at 3.75 percent if tax is rolled back: $2,062
- Average reduction with the rollback: $688
Most Democrats say allowing the tax to roll back, as planned, would lead to drastic and painful cuts in education, social services and other state programs. Republicans say the tax hike hurts the state's economy and business climate, and that the government needs to drastically cut back spending instead.
Quinn's assistant budget director, Abdon Pallasch, argues that while rolling back the rate would save taxpayers' money in state income taxes, the result could be that they pay more in local property taxes, such as those used to pay for public schools, which would see cuts in state funding.
Sources: Governor's Office of Management and Budget; Illinois Department of Revenue.
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