Chicagoans concerned over proposed tax increase

January 7, 2011 8:31:06 PM PST
Supporters of the tax increase say it will help cure the state's financial troubles, but many taxpayers and businesses say the increase will make their financial problems even worse.

From board rooms to living rooms, reaction to the proposed increase was swift and overwhelmingly negative.

The proposed tax hike isn't sitting well with Eddie and Margaret Krochmal.

"Every year and every month when we pay all out bills, we're just getting by, and this is definitely not a good thing, any tax increase," Eddie Krochmal said.

The Krochmals would be hit on two fronts: Eddie's garage repair business would see a corporate tax increase, and Margaret, a nurse, would pay more in personal income tax.

"Do I have to look for another job and work more and not be home more, so we can live right?" Margaret Krochmal said.

The non-partisan Illinois Policy Institute estimates a family with two kids earning $80,000 a year currently pays more than $2,100 in state income taxes. Under the proposed hike, that same family would pay over $1,600 more, a total of nearly $3,800.

Illinois citizens - the average, the hard-working, the poor and disadvantaged - will be most impacted," said Daniel Anthony with the Illinois Policy Institute.

The business tax rate would rise from 4.8 percent to 8.4 percent, and combined with the current personal property replacement tax of 2.5 percent, businesses would pay nearly 11 percent combined, the highest flat rate in the nation.

Marilyn Jones runs Consolidated Printing, a pioneer in environmentally-friendly printing.

"It's incredible. What are they thinking? Look at the economy. Where do they think the people are going to get that money?" Jones said.

"We have had an anti-business sign on our door for the last decade," said Doug Whitley, president and CEO of the Illinois Chamber of Commerce. "If we have the highest corporate income tax, we might as well make that a neon sign saying we're closed for business."

Long-time Chicago Alderman Bernie Stone says disaster is about to strike Illinois if the state income tax is raised.

"I'm asking all the citizens in this state to contact your legislators and tell them this is a disastrous act which they are about to perform," Stone said.

Stone says increased taxes will destroy the state's economy. He's calling for big budget cuts and more incentives for businesses.

Jim Kane heads the tax committee for the Chicagoland Chamber of Commerce which tries to promote business in the region. He says their job could become much more difficult.

"Pretty wild for a state that's looking to grow. They're just going to chase businesses away and discourage other businesses from coming here," said Kane.

The nonpartisan Civic Federation says a tax increase without budget cuts will solve nothing.

"Within two to three years the state could find itself with its structural debt continuing to grow rather than eliminating it, which should be the ideal," said Laurence Msall.

In light of the proposed tax hike, the Krochmals say they're now re-thinking how to pay for their daughters' education.

"There are other ways of making up the deficit instead of coming to just normal people and homeowners and asking them for it all," Eddie Krochmal said.

The proposed 5.25 percent personal income tax rate would not be the highest in the nation but according to The Tax Foundation, a research group, Illinois' ranking in terms of tax index would go from one of the lowest in the U.S. to one of the highest.