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Lawmakers in Illinois are considering some drastic measures to increase state revenues and erase the $15 billion state deficit. Those measures are part of a three-pronged approach to increasing revenues, including a $1 per pack tax increase on cigarettes; an increase in corporate taxes; and a 75% increase in the income tax rate, from the present 3% to a startling 5.25%.For the average Illinois citizen paying $1000 in state taxes now, this would mean that after the proposal becomes law, Mr. Joe Taxpayer will owe $1,750. However, before Joe has a heart attack from the news, he should first know that the increase is temporary, planned now to last only four years. After that the tax rate will go down to 3.75%.The proposal states that the permanent increase will be directed towards schools and to repaying a loan of $8.5 billion which will be used to pay an assortment of overdue bills, according to the state Senate President John Cullerton. He also added that another bit of the tax increase will find its way back to taxpayers in the form of property tax relief of about $325. This rebate, in the form of checks, would come to replace the present property tax exemption that homeowners can presently take on their income tax.
