Aldermen critical of proposed income tax increase

January 8, 2011 5:30:55 PM PST
The debate is heating up this weekend over a proposed 75-percent income tax increase in Illinois.

Democratic leaders in the Illinois House are trying to build support, but it is going to be a tough sell.

A group of aldermen have now joined the growing list of city officials critical of the proposed state income tax increase. While some agree the tax increase could help cure the state's dire economic condition, others remain concerned that the hike will create more financial problems for taxpayers and businesses, especially if Chicago does not see an increased share of the new revenue.

"If our citizens have to pay into the pot, it's only fair that our citizens get some money out of the pot," said 27th Ward Ald. Walter Burnett.

Burnett joined Ald. Joe Moreno and several others who want to make sure that if state lawmakers approve an income tax increase, Chicago gets its fair share. As it stands, revenue to Chicago would remain capped at one tenth of one percent -- regardless of any increase.

The opponents say with ongoing budget woes and pension commitments, the city cannot afford to miss out on millions.

"With unfunded mandates like funding the pensions for police and fire, it's unworkable and it's just unfair," said Moreno of the city's 1st Ward.

The proposed state tax deal would temporarily raise the personal income tax rate for the next four years from 3 percent to 5.25 percent. It would also increase the corporate income tax rate from 4.8 percent to 8.4 percent and boost the state's cigarette tax by $1 to $1.98, which would generate roughly $7.5 billion each year.

Mayor Daley's reaction to the proposal was as expected: negative.

"We have to do more with less. Then, all of a sudden, after we have our election, they want to increase these taxes," Daley said.

Supporters say the new revenue would be used to reduce the state's debt and fund education and human services. It would also pay for the $12-billion loan Illinois would borrow through a deal to immediately pay off the state's annual pension contribution and its growing backlog of bills.

Taxpayers would also get some of the money back annually in the form of a $325 property tax rebate check.

According to a research group, the income-tax rate moves Chicago to one of the highest-taxed areas in the country.

Illinios lawmakers are due back in Springfield Sunday, ahead of Monday's inauguration of Gov. Pat Quinn.

ABC7 Chicago's Charles Thomas will be in Springfield providing live coverage beginning during our 5 p.m. broadcast Sunday.