By Josie Harpole
Ever get caught thinking that your paycheck is no longer what it used to be? This time you may actually be right. The state of Illinois recently passed a 66 percent state income tax increase. This was done in an effort to help the state’s shockingly large debt. It is said the increase will generate $6.8 billion a year. These increased rates were passed January 12 and are currently set until 2015.
Some say this was the state’s only option. The state of Illinois has made major cut backs in spending and is now down to a historical low, and still remains more than $13 billion dollars in debt. No other states have successfully raised their income taxes to balance their budget for the upcoming year. Illinois also faces $77.8 billion in under-funded pension liabilities, giving Illinois the largest under-funded pension system currently at play in the United States.
Not only will this be felt by the average citizen in Illinois and seen in the average paycheck, but business owners also will be hit hard. Companies will now need to pay 7 percent corporate tax, as compared the earlier 4.8 percent, and businesses will continue to be hit with a 2.5 percent surcharge. Gov. Pat Quinn says getting the state to a sound financial setting will improve economic growth, yet with sales already suffering, some business owners are already commenting that they will not be hiring any time in the near future. Many Illinois citizens are in an uproar about the recent tax hike and claim it will stunt the growth of both jobs and businesses. Many businesses may even make the choice to move to other states with lower income tax rates. Making matters worse, Illinois will not be paying vendors promptly, nor sending corporate tax income checks. Doug Whitley, head of the Illinois Chamber of Commerce, says the state owes nearly $1million in refunds.