Posted Online: 2007-02-09
State tax increase proposed to bolster school funding
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By Stephanie Sievers
SPRINGFIELD -- Proponents say this is the year the Illinois Legislature will give property tax relief and direct more income and sales taxes to fund schools, but some lawmakers say it is still far from a sure thing.
Sen. James Meeks, a Chicago Democrat, announced Thursday he again will push a proposal to raise $9.5 billion through taxes to fund schools and the state's pension obligations.
Taxpayers would get some property tax relief under the plan, but would see personal income tax rates rise from 3 percent to 5 percent and corporate income tax rates from 4. 8 percent up to 8 percent.
And for the first time, Illinois also would charge sales tax on consumer services like haircuts, car repairs and lawn care. All of Illinois' bordering states already tax consumer services to some degree.
"We've had enough time to talk about it. The action is now," said House sponsor Rep. David Miller, D-Calumet City.
Rep. Lisa Dugan, D-Bradley, agrees that something must be done about school funding, but she's leery about jumping on board without some kind of assurance that property taxes won't just start creeping back up.
Rep. Mike Boland, D-East Moline, said there seems to be a public momentum and the political will to actually get something done this year, but he has doubts that it will be Meeks' plan.
The governor opposes income and sales tax increases and Boland says he'd be reluctant to support them as well. He said he believes a gambling expansion might be more likely.
Higher taxes could be a hard sell, but Ralph Martire, executive director of the Center for Tax and Budget Accountability, which helped draft Meeks' proposal, says that with $2.7 billion in property tax relief and income tax credits, the majority of people won't end up shelling out more.
The bottom 60 percent of income earners will not pay more in taxes while the top 40 percent will pay about 1.1 percent to 1.3 percent more, Martire says. And with consumer services making up a significant portion of Illinois' economy, the state can no longer afford to exempt it, he said.
But Kim Clarke Maisch, Illinois director of the National Federation of Independent Business, said service taxes will hurt an Illinois business climate already encumbered with high unemployment insurance rates, business fees and tough worker's compensation laws.
Previous attempts to tax consumer services in Illinois have been soundly defeated, said Rep. Frank Mautino, D-Spring Valley.