12/15/2011 04:17 pm ET

Illinois Lawmakers Aim To Rollback Corporate, But Not Personal, Income Tax Hike

Illinois House Republican leaders on Wednesday introduced a proposal that would roll back the corporate income tax hike that state Democratic leadership championed earlier this year.

Tom Cross, state House Minority Leader (R-Oswego) said that the bill (HB 3918) is needed to improve the state's economic climate and create new jobs, CBS Chicago reports.

The proposal would decrease the corporate income tax from 7 to 6 percent in 2013 and from 6 to 4.8 percent by 2014 -- the level it was at before Democratic lawmakers increased the tax rate in January.

While Cross admits that the corporate tax breaks would implement a $900 million blow to the state's finances, he claims that revenue would be generated by new jobs and additional cuts to the state budget, according to the State Journal-Register.

Cross specifically pointed to Medicaid reforms as one source for budget cuts that could make up for the lost revenue, the Chicago Tribune reports.

"The approach we have with respect to taxes on businesses is not working," Cross said in a press conference Wednesday, as the Tribune reports. "We need to look at this in a broad-based approach, making sure businesses and companies in the state and outside the state have some certainty and stability."

The deal would also connect the state's corporate income tax rate with its unemployment rate in a way that could fast track the corporate tax breaks, the State Journal-Register reports. Specifically, the rate would decrease by 0.25 percent anytime the state's unemployment rate increases by 0.3 percent over a four-month period.

Some Democratic lawmakers also offered up their own proposal (HB 3917) to decrease corporate income taxes by restoring the rate to 4.8 percent beginning Jan. 1 of next year. State Rep. Jerry Costello II (D-Smithon), the Democratic proposal's main sponsor, told MyWebTimes, "We've got to find a way to not only keep companies in the state of Illinois, but we've got to find a way to attract new companies."

Costello's bill has attracted six other Democratic sponsors to date.

Gov. Pat Quinn said Cross's plan would create a massive state budget shortfall that would impact education funding and lead to more layoffs of state employees, including teachers, according to the Tribune.

The proposal arrives on the heels of a $330 million tax break package approved by the state legislature in order to keep Sears, the CME Group and the Chicago Board Options Exchange's business operations in the state. The measure also increased tax credits for the working poor and raises the personal income tax exemption. The measure is now only awaiting the signature of Quinn, who previously called the package "a win for the people of Illinois."