SPRINGFIELD, Ill. — Gov. Pat Quinn signed legislation Thursday that temporarily raises Illinois income taxes by two-thirds, risking a political backlash against Democrats but gaining money to help drag state government out of the deepest budget hole in its history.
The law raises the personal tax rate to 5 percent, up from 3 percent. That means someone who previously owed the state $1,000 in taxes will now pay $1,666. The tax rate is supposed to drop to 3.75 percent after four years, so that same taxpayer would then owe $1,250.
Corporate taxes are going up, too – to 7 percent instead of 4.8 percent.
Quinn approved the increase without any statement or ceremony. The action, just four days into the Chicago Democrat's first full term, achieves the main goal he outlined to voters in last fall's campaign.
The state budget deficit was projected to hit $15 billion in the coming year, endangering government's ability to pay employees, provide money it owes to schools and local governments and reimburse the businesses and charities that work for the state. Quinn's office estimates the tax increase will generate about $6.8 billion a year, enough to balance the annual budget and begin chipping away at the state's backlog of about $8.5 billion in unpaid bills.
House Minority Leader Tom Cross, R-Oswego, said the increase will be devastating to families and businesses. He also said Democrats have shown no interest in cutting costs, making it likely the tax increase will end up being permanent.
"There's no way to make this work on a temporary basis," Cross said. "It's impossible."
The bill is SB2505.