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Illinois Sat Mar 14 2009
Increase State Income Tax? Fine, but give (some of) us a break!
As expected, Governor Pat Quinn has proposed increasing the state personal income tax to help close the impending budget shortfall. According to the Chicago Tribune, the current tax rate of 3% would increase to 4.5%. Paired with the hike is a tripling of individual exemptions, from $2,000 to $6,000. In addition to the standard exemption increase, several new measures would be introduced to help alleviate the impact on lower income families. Past governors of both parties have unsuccessfully pushed to raise the abnormally low tax, so proposing this increase is not a particularly unique or partisan issue. However, Gov. Quinn should take some added measures to comfort a population battered by incompetent state and local government.
While Chicago became notorious for it's highest-in-the-nation sales tax rate after Cook County increased its percentage, it is easy to forget that the majority of the sales tax percentage is, in fact, the state's portion. (For a breakdown on the Cook County sales tax rate click here.) To help smooth the transition, Gov. Quinn should allow the state to decrease the sales tax assigned to Cook County. Doing so would help stimulate activity in the largest consumer base in the state while simultaneously easing the burden on the largest collection of lower income families.
Possessing more than 5 times the population of the next largest county, Cook County is clearly a substantial "donor" county when tax receipts are compared to state spending received. Because the county pays more than it receives in state funding, residents are forced to pay a host of regional taxes that unfairly place the burden of providing basic services that benefit the whole state. Further exacerbating this imbalance is that this condition is not isolated to state funding. For example, despite accounting for approxiamately 80% of the state population, the Chicago area receives only 45% of the federal transportation dollars targeted towards Illinois. (Coincidentally, that is the Chicago area's share of the transportation dollars contained in the stimulus package.)
The lack of a state income tax increase has hampered a state government over-reliant on volatile sales taxes and gimmicky lotteries. While Cook County residents are resigned to accept that their tax dollars will inevitably help fund other counties that could otherwise not provide the standard of living shared by all Illinoisans, state legislators should give credit where credit is due and relieve the Cook County area of the embarrassment and burden of the highest sales tax in the country.
