Gov. Pat Quinn and top Democrats are pressing forward on a major income-tax increase and a $1-a-pack hike in cigarette taxes.
The personal income tax rate would rise from 3 percent to 5.25 percent, Senate President John Cullerton said this evening. The amount tracks with what the Tribune reported today. After four years, it would fall to 3.75 percent, he said.
The corporate tax rate on businesses would rise from 4.8 percent to 8.4 percent.
This will kill growth, jobs, and will hurt all of us in Chicago. The recession is going to last longer in Illinois than elsewhere because of measures like this.
Two weeks ago I wrote about how people are fleeing high tax states for low tax states. Say what you will about Prof. Laffer, but his analysis of tax elasticity appears to be dead on. The Laffer Curve is real and accurate.
The problem is two fold: not only will businesses leave, but companies that were thinking of relocating to Illinois will chose someplace else instead. The loss to the state as a result of this will be billions.
Interestingly, Democrats seem to love to talk about how our friends in Europe govern. Recently in the UK, the bi-partisan government agreed to both modest tax increases (not nearly double) and also extensive cuts in spending. Seems that Dems on this side of the pond only want to tax and tax and tax and not cut a single nickel.
If Chicago goes down the same path were doomed.