Sunday, January 9, 2011

Aldermen critical of proposed income tax increase

Two aldermen, Joe Moreno (1st) and Walter Burnett (27th), aren't very happy about this potential income tax increase being considered in the lame duck session of the Illinois General Assembly:
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. 
Generally I'm against tax increases - especially income taxes - however, I do support the efforts of these Aldermen to make sure the city gets its fair share of taxes. The city isn't doing that great fiscally itself so of course Illinois' largest city wants to get a significant piece of that pie.

The contents of this tax increase are:
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.
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.
We're currently in a recession, correct? So while we consider raising taxes in a recession the Capitol Fax (from where I found this story) talks about how our neighboring state is expecting to benefit from this tax increase. Yeah this state and our city needs to pay the bills but what could this mean for future economic growth here?

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