Facing one of the biggest budget shortfalls of any state, Illinois took the risky step of jacking up income and corporate taxes even as its economy struggles to shake off the recession.
WITH NO CUTS IN GOVERNMENT SPENDING
In a deal hammered out by the state’s Democratic leadership, the lame-duck legislature pushed through a 67% increase in the state income tax and a 45% increase in the corporate tax.
The new income-tax rate would add about $1,040 to the tax bill of a family of four earning $60,000 a year, and the new corporate rate would move the state into the top 10 among corporate taxers nationally.
Skeptics worried the increase has the potential of chasing both businesses and residents out of the state, and Democrats face the possibility of losing political support in 2012.