IL governor proposes 50% income tax hike

SPRINGFIELD, Ill. - Illinois Governor Pat Quinn wants to raise income taxes, charge more for license plates and cigarettes and overhaul government pensions as he wrestles with an $11.5 billion hole in the state budget.
His administration disclosed a budget proposal this evening that will ask lawmakers to raise the personal income tax rate by 50 percent - from 3 percent to 4.5 percent.

But Quinn wants to couple that with expanded tax breaks that would soften the blow. By tripling the amount of income exempt from taxes, Quinn says, his plan would actually lower taxes for any family of four making up to $60,900.

Aides say nearly half of the state's taxpayers would see a drop in their tax bill. Quinn will address a joint session of the Illinois Legislature today.

Driver License and sticker fees

Gov. Pat Quinn is asking Illinois drivers to pay higher fees for renewing their driver's license and vehicle stickers. He says the increases will help fix crumbling roads and bridges. Quinn wants a $26 billion construction program, supporting 340,000 jobs.

State officials have argued for years over how to pay for such a construction plan. Quinn's answer is to raise the cost of license plate stickers by $20, bringing their cost to $99. A driver's license that now costs $10 would climb to $20. Neither of those fees have changed in at least a decade.

Quinn also wants to increase fees for transferring a title and vehicle registration. That money would be devoted to public transportation. Lawmakers are dubious about the proposal since their constituents are already strapped for cash.

Raise state income tax by 50%

Gov. Pat Quinn wants to raise the state income tax to help plug an $11.5 billion budget deficit but he's looking to soothe some of the sting with tax breaks. Quinn has proposed a back-to-school state sales tax holiday and he wants to triple the personal exemption so people can shield more of their income from taxation.

The Illinois Retail Merchants Association is blasting Quinn's tax holiday that it says comes at the expense of already-suffering retailers.
Quinn wants to recoup the cost of the tax holiday by lowering the portion of sales tax retailers get to keep in exchange for collecting the tax for the state.
Quinn's proposed tax holiday would be 10 days in August on clothing and footwear valued at $100 or less and school supplies.

Gov. Pat Quinn's budget proposal calls for a sales tax "holiday" on back-to-school items for 10 days in August. According to the budget documents released tonight, that would cost as much as $50 million that would be paid for by reducing the amount retailers get to keep in payment for collecting the tax.

Quinn's budget proposal includes $28.4 billion in general-funds spending, with an increase of $174 million for elementary and secondary education. It also includes $40 million more for colleges and universities.

Budget proposal at a glance
Here's a look at major budget ideas Gov. Pat Quinn will present Wednesday in his formal address to the Illinois Legislature:
-An increase in the 3 percent personal income tax rate. The new rate would be 4.5 percent, generating $2.8 billion.
-Tripling the personal exemption, shielding up to $6,000 in income from being taxed. That means a family of four with an income of $60,900 would pay less in taxes next year.
-A hike in the corporate income tax from 4.8 percent to 7.2 percent, bringing in $350 million more.
-Keep $287 million from the higher taxes that would normally go to local government.
-Increase the $79 fee for license plates by $20, generating $180 million.
-Increase the $10 fee for driver's license by an additional $10, generating $20 million.
-Raise the 98-cent cigarette tax by $1 a pack over two years, pushing it to $1.98. Would generate $276 million in the second year.
-Offer a sales tax "holiday" on back-to-school items for 10 days in August, costing as much as $50 million that would be paid for by reducing the amount retailers get to keep in payment for collecting the tax.
-End several tax breaks for businesses, generating $100 million.
-Take $200 million out of various special-purpose funds supported by user fees.
-Divert $150 million from the road fund to help pay for a statewide construction program.