WILSON: Illinois lawmakers caught between a tax and a hard place

Posted: Mar. 28, 2014 11:48 am Updated: Jun. 20, 2014 2:15 pm

Taxes are usually not popular with politicians during election years, but the 2014 election cycle in Illinois is shaping up as the exception, rather than the rule.

Gov. Pat Quinn announced during last week's budget address that he wants to permanently keep the income taxes at the rates approved in January 2011, instead of allowing them to roll back.

For individuals, that would mean a 5 percent income tax rate would continue beyond next January. It has been scheduled to fall back to 3.75 percent.

Corporate income tax rates are 7 percent now, up from 4.75 percent a few years ago.

In order to sweeten the tax proposal, Quinn said the state should provide a $500 check to 2.3 million Illinois property owners every year. He hopes that people hate their property taxes more than their income tax bills. Or he would like for them to remember their $500 property tax rebate checks, but forget that they're paying even more in income taxes.

Republicans, on the other hand, want voters to remember that Democrats who passed the 67 percent income tax hike promised that it would be temporary.

Speaker Michael Madigan, D-Chicago, has his own tax proposal. Madigan wants to see the Illinois Constitution amended to allow the state to collect a 3 percent surcharge on taxpayers who make $1 million or more in a year.

Madigan said the tax would raise $1 billion a year for the state. His "sweetener" is that the tax money could go to schools and represent about $550 per student.

In order to pass the constitutional amendment, the Legislature would have to pass it by a super majority and rely on voters to approve it.

Sen. Don Harmon, D-Oak Park, has a different graduated tax proposal that would start with a 2.9 percent on the first $12,500 of income. Income between $12,500 and $180,000 would be taxed at 4.9 percent. Income of more than $180,000 would be taxed at 6.9 percent.

Harmon argues that the federal government and 34 of the 41 states that collect income taxes have graduated tax rates. He also said that 94 percent of Illinois residents would have lower income taxes under his plan.

Usually, tax proposals come up during non-election years. Politicians know they lose votes when they embrace higher taxes and they generally don't want to lose votes in election years.

Some of the politicians involved say they're seeking "tax revenues" because that's the only way to catch up on more than $7 billion in overdue payments to service providers and vendors. By their argument, retaining the income tax hikes or making income taxes progressive, are the best ways to fix the state's fiscal problems.

Republican gubernatorial nominee Bruce Rauner will undoubtedly buy campaign ads that paint him as the anti-tax alternative.

GOP candidates for the Illinois House and Senate also will find easy targets if Democratic incumbents vote to raise taxes.

Yet Democratic leaders in the House and Senate will need all their members to vote for the progressive tax plans in order to move the constitutional amendments on to voters. Between their leaders and angry voters, the rank-and-file lawmakers will be stuck between a rock and a hard place.