Gov. Quinn hints at possible income tax hike

March 9, 2009 3:21:09 PM PDT
As Gov. Pat Quinn looks to fill a $9 billion deficit, everything is being considered, including changes to how income is taxed in Illinois.

For some, the changes could mean paying more income tax, but others could end up paying less than they do right now.

Quinn's first state budget will be released in just over a week.

Much of this is about politics: if Quinn decides to run for a full-term next year, he does not want to be known only as the incumbent who raised taxes. Quinn might be able to style himself as the candidate who cut taxes, or at least held them at bay for a large number of Illinois wage earners.

"You should rely on taxes that are based on ability to pay," Quinn said Monday.

The governor said he is saving the details until his budget address on March 18. But he indicated he believes there is a way to either reduce or eliminate state income taxes for low income workers.

"If you use the personal exemption to provide tax relief to families, especially parents raising kids, you can give tax relief to a lot of people who right now are paying too much," said Quinn.

Right now the Illinois state income tax is a flat 3 percent of gross income. It is estimated that each additional 1 percent would raise about $4 billion in revenue for a state with a projected $9 billion budget shortfall.

Civic Federation director Laurence Msall says, before any tax increase is considered, Illinois should cut state worker pensions, limit retiree health benefits and better manage the Medicaid program to save billions.

"We're most concerned that the governor would talk about a tax increase or the General Assembly would talk about a tax increase before it does everything it can to close the deficit through cuts and reductions," Msall said.

Quinn says he is considering "painful" cuts in state services as part of his budget plan.

National Taxpayers United founder Jim Tobin says any plan to reduce or eliminate state taxes on low-income wage earners will make it that much worse for those on the top.

"The folks who have low income would pay no income tax at all, where middle income taxpayers would receive an increase of up to 67 percent, and that includes middle income taxpayers and more affluent taxpayers," Tobin said.

Gov. Quinn said he was not inclined to support an increase in the per gallon tax on gasoline to fund a capital program to rebuild Illinois roads and bridges. There are legislative discussions right now on increasing the gas tax 8 to 16 cents a gallon.

This idea of a tax cut for at least some people is a major clue to what the governor is thinking at this point.


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