Illinois House Approves Historic 32% Tax Increase, Governor Vows Veto

Tyler Durden's picture

With Illinois, which on Saturday morning entered its third fiscal year without a budget, facing a catastrophic downgrade, late on Sunday evening the Illinois House approved the most controversial element of a budget package, a tax hike which will increase the income tax rate by 32% from 3.75% to 4.95%, and the corporate income tax rate from 5.25% to 7%, to try and end a historic budget impasse. The bill passed 72-45. The House also approved a $36 billion spending plan minutes later on a 81-34 vote. According to the Sun Times, it cleared an initial hurdle on Friday with 23 Republicans voting “yes.”

“While no one could say this was an easy decision, it was the right decision,” House Speaker Mike Madigan said after the spending bill vote. “There is more work to be done.” Dems said they would work with Republicans on other resolution of other issues on table.

The proposed tax increase will now head back to the Illinois Senate, which approved a revenue bill on May 23 with all Democratic votes as part of its “grand bargain” package. But Governor Bruce Rauner has said he’ll only support an income tax hike if it’s limited to four years and paired with a four-year property tax freeze. He’s also still seeking changes in workers’ compensation and pensions.

Commenting on the just passed House bill, Rauner said he’ll veto the revenue bill.

I will veto Mike Madigan’s permanent 32% tax hike. Illinois families don’t deserve to have more of the hard-earned money taken from them when the legislature has done little to restore confidence in government or grow jobs,” Rauner said.

“Illinois families deserve more jobs, property tax relief and term limits. But tonight they got more of the same." He also said in an emailed statement that “if the legislature is willing to pass the largest tax hike in state history with no reforms, then we must engage citizens and redouble our efforts to change the state."

Some commentators promptly countered that Rauner's veto will likely be overriden.

The tax bill passed with some essential Republican support: it needed 71 votes. But Illinois House Republican Leader Jim Durkin questioned how it will address the state’s $14 billion backlog. Durkin is seeking to get Rauner the “balanced budget package,” he wants, which includes spending reductions and “meaningful reforms.”

“I am disappointed that we’re taking this up at this moment when there has been significant, significant progress to address the priorities of the governor and also the priorities of this caucus,” Durkin said.


There are, of course, political ramifications to supporting a tax hike, on both sides of the aisle. Some House Democrats were expected to vote no to try to shield themselves from Illinois Republican Party attacks in next year’s election. But some House Republicans, knowing they’d too be targeted for supporting it. said there’s no other choice.

Others were even more fatalistic: “If I lose my seat so be it,” state Rep. Michael Unes, R-Pekin said, adding the state shouldn’t have gotten so close to a financial collapse. “Without this, we will lose thousands of lives and thousands of jobs and the alternative is so much worse. I don’t like this. This is not easy. This is really, really difficult,” Unes said. “But the alternative is much worse than this. The alternative is literally taking our state off the cliff.”

David Harris was among the Republicans who supported the bill, while also urging the governor to sign the revenue and spending bills if passed: “Have the courage to do what is right and bring this madness to an end.” 

“I was not elected as a state legislator to help preside over the financial destruction of this great state,” Harris said. “I respect my colleagues who are voting no. But to me, enough is enough.”

Meanwhile, changes made by House Democrats from the original Senate bill include the removal of streaming and satellite fees. It also closed corporate tax loopholes, increased the earned income tax credit, and restored the research and development and manufacturers’ tax credit to attract more businesses.

House Democrats filed amendments to both the tax and spending measures on Sunday, which included nearly $400 million more in cuts. Although some House Republicans voiced frustrations over changes, House Democrats said they were reflective of topics discussed during negotiations.

It is unclear if the passed tax increase will be sufficient to placate S&P. Recall July 1 was the date when the credit agencies said they would drop the state to “junk” status without a budget. Ultimately, the fate of Illinois' credit rating is now in the hands of Rauner, and whether and how fast his imminent veto is overriden.

Ultimately, Illinois faces a lose-lose dilemma: get junked and see its funding costs soar, or save its lowest possible investment grade rating, and watch as what is already the worst metropolitan exodus (recently the population of Chicago shrank the most of any US city), go into overdrive as tens of thousands more scramble to escape the state's soaring tax rates.

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G-R-U-N-T's picture

Incredible! Next up: Mass migration, bankrupting them more than they already are!

xtremers9's picture

And that's why everyone's moving to florida

Juggernaut x2's picture

FL is a shithole just like all Southern states

Rentier88's picture

Exactly don't come down here we don't want you yankees.

greenskeeper carl's picture

Very true. Make sure you stay as far away from the South as possible. Everything negative you've heard is true.

Secret Weapon's picture

Especially Texas.  The quality of life here is terrible and the people are not nice.

Creative_Destruct's picture

Yes Florida is a HORRIBLE place... Spread the word...STAY AWAY.....

TBT or not TBT's picture

Earth sucks, lefties. Drink the Kool Aid. Go into the light.

Gold Dog's picture

"America's Pecker" is chock full of Zika, crocagators and golf balls flying onto the highways.

Only crazy people would even consider visiting much less living there. YOU WILL get skin cancer!!!!!




PS- If they call it Snowbird Season why can't we shoot them?

yogibear's picture

Liberals destroy every state they infest.

nmewn's picture

Correct Mooohamid.

Correct Mooohamid.

The mosquitoes are the size of pterodactyls and alligators roam the sewers. All true!

Juggernaut x2's picture

Typical hebe- Muzzies on the brain. I have been to FL a few times- never really understood the attraction- old people, hot as hell, hillbillies, Cubans, etc.

Dancing Disraeli's picture

Waddya got against hillbillies?

Course, in Fla they're flatbillies, but still.

chubbar's picture

This is amazing to me. So essentially what the democrats and some republicans are saying is that they are unable to identify ANY spending cuts in the current budget? How about just going back in time to when the budget was balanced and the income reflected what they are currently experiencing? Use that budget and cut out everything that was enacted since. These people are completely out of their minds and it doesn't bode well for all of us going forward when they can't even consider spending cuts.

charlewar's picture

The Dem voting base of welfare maggots won't move anywhere!

MoreFreedom's picture

The welfare queens will move to the states with the most welfare, especially when the welfare in their state is cut.

It's the true race to the bottom.  It's where two wolves and a sheep vote on what's for dinner.  I prefer states where it's illegal to vote on eating others for dinner, and everyone how to earn their own dinner without the use of government to get it for them.

Misplacedcowboy's picture

The Dirty SOB's deserve EVERYTHING they get.   Think of it as either the Al Capone State or the Obama state.  In short it's one damn corrupt state.

Cman5000's picture

Yep. Minnesta is being flooded with all these Chicago folks. Crime and Ghetto culture in overdrive now.

chubbar's picture

Minnesota has other problems now. Rapefugees are being imported by the busload and the gov't is completely co-opted by the libtards. I fully expect this state to go the same way that Chicago is going. It never seems to occur to any of these fucking assholes in gov't that the taxpayer has limited funds with which to support the state whereas there are an unlimited number of ways to spend funds and the gov't appears to be determined to explore every one of them.

GunnerySgtHartman's picture

Others were even more fatalistic: “If I lose my seat so be it,” state Rep. Michael Unes, R-Pekin said, adding the state shouldn’t have gotten so close to a financial collapse. “Without this, we will lose thousands of lives and thousands of jobs and the alternative is so much worse. I don’t like this. This is not easy. This is really, really difficult,” Unes said. “But the alternative is much worse than this. The alternative is literally taking our state off the cliff.”

Let me get this straight: raising taxes is now a life-and-death issue in Illinois?  Life-and-death for who?  Politicians?  And this tool thinks that raising taxes is going to SAVE jobs?  WTF???

Illinois has already gone off the cliff.  The question is what will be left after it hits bottom.

dark pools of soros's picture

Yes, raising taxes saves lots of gov jobs and cops and teachers...

chubbar's picture

Not for long. The pension funds are based on a ponzi that requires funding every year. As the tax base shrinks every year due to these morons and their tax policies, it will become harder and harder to support the current gov workers and their pensions. What they are doing now is unsustainable and is putting these pensions at greater risk. Of course the union leadership doesn't see it that way and won't take the charge in making sustainable changes to the pension plans. So what is going to happen is that the retirees will get 100% of promised pension benefits until the state goes BK, then who knows what they will get. It's a pretty big gamble.

TsyFox's picture

Speaker Madigan definitely OutFoxed Gov Rauner. Ratings Agencies Want Tax Increase to be Permanent. Rauner will veto, and Madigan will end up looking like the Only Adult in The Room.

Blankenstein's picture

Do you always kiss the ass of psychopaths?

Bloodstock's picture

The (Illinois) House of Madigan brings the legislation and Rauner says hell no! That's the way we need it, fuck off Madigan you've run this state into the ground,,,you are the problem.

Bloodstock's picture

Through Downstate Assistance the State of IL contributes almost $9 million annually to Connect Transit which is the city bus system in Bloomington-Normal, IL. These busses have low ridership and lose almost $12 million a year. Governer Rauned needs to turn off spigets such as these, it's crazy!

IENTJ's picture


Bunga Bunga's picture

... until all tax amounts reach the GDP.

A Nanny Moose's picture

...on a long enough timline....

HungryPorkChop's picture

Business and personal tax have already hit the ceiling of dimishing returns.  Raise taxes all you want but the actual revenue will not increase or it will be just a short term gain for a year until the effects are felt.  What they will quickly find is businesses and middle class start to flee at an ever increasing rate.  Can you say words like Puerto Rico and Greece?

TBT or not TBT's picture

Illinois is now way out on the Laughter Curve. The Laffer curve is an even tougher bitch.

serotonindumptruck's picture

Yeah, it's known as "kicking the can" down the road to perpetuate this absurdity into infinity.

As a hypothetical, if you were an elected politician in a state such as Illinois, and you were guaranteed a fluctuating high rate of income for the rest of your natural life, would you vote against such a proposal?

That's a difficult question for many people to answer honestly.

Vote against the resolution and be blacklisted, shunned, and disavowed by everyone that you ever knew in your professional life, and be bankrupt, or vote in favor of the resolution and continue to pretend that everything is just hunky-dory.

Cheyenne01's picture

Gotta love those politicians. Their ONLY solution is to tax the suckers moar - never mind that they're already taxed to their eyeballs. And why not? Who else will pay the politicos six figure salary/lifetime benefits? That's what counts, and it's the only thing that counts.

Triple A's picture

Extend and pretend, It's the only thing these scum politicians know how to do.

TBT or not TBT's picture

How is Illinois supposed to print though? Hillary lost.

NoDecaf's picture

"There is more work to be done" they said


bigdumbnugly's picture

Yes, a Legislator's work is never done (or something like that).

nmewn's picture

The great thing about it never being done is there is always people squaking about something needing to be done!

Its really a win-win ;-)

bigdumbnugly's picture

it's for the children, dontcha know.

beeeeeep's picture

They seriously think work is basically creating new taxes and raising current ones.

yogibear's picture

"There is more work to be done" they said

They mean, raise taxes again next year.

There is no limit to the Liberal's madness.

nmewn's picture


lol...and its...wait for it..."historic"...yeah, no problem, the shit grows on trees and it'll be "historic" alright down the road ;-)


Happy Independence Day Illinois tax cows

Juggernaut x2's picture

If you have a job and a house you pay 60% of your income in some form of tax(income, real estate, sales, etc) or fee to Uncle Scam- Happy 4th!

ThrowAwayYourTV's picture

You mean, Happy Dependant Day don't you?

Zorba's idea's picture

for some in the land of Lincoln, its time to moOOOOOve.

fiftybagger's picture

"increased the earned income tax credit"

And people who pay no taxes got more free money from taxpayers!

Hahahahaha.  You can't make this stuff up.