Democrats in the Illinois General Assembly announced last night that they had reached an agreement on a plan to deal with the State’s budget crisis. In addition to borrowing $12 billion, the plan calls for a 75% income tax increase. The plan also calls for taxes on cigarettes to increase by a dollar per pack.
The Illinois income tax rate is currently 3%. The proposed plan would increase it to 5.25% for four years. Thereafter the rate would fall to 3.75%.
The General Assembly is not in session today and a bill has not yet been brought to a vote. Republican leaders have voiced opposition to the plan. The General Assembly is expected to vote on the plan before next Wednesday, when a new General Assembly will be sworn in.
Illinois currently has $5.2 billion in unpaid bills, some dating back as far as July. The combination of tax increase and borrowing would pay off those bills by the end of March.
If enacted, the tax increase would be effective from January 1 of this year.
For more information on this or other tax issues, contact the Illinois tax attorneys at Horowitz & Weinstein.
Horowitz Law Offices
311 West Superior, Suite 314
Chicago, Illinois 60654