Income tax
12:34 am
Tue April 8, 2014

Tax Watchdog Group: Income Tax Doesn't Hurt Businesses, Property Tax Does

Credit flickr/danxoneil

  Opponents of Governor Pat Quinn's proposed income tax increase say it will chase jobs out of Illinois. A new report that challenges that assumption.

What to do about Illinois' expiring income tax hike has been the star of the debate this spring. The governor threatens cuts unless its extended, while Republican leaders say keeping the higher tax rate is a bigger threat to the economy.

Ralph Martire, director of the Chicago-based Center for Tax and Budget Accountability, says that's a misunderstanding. He says property taxes are the true obstruction of economic growth.

"It is a hard cost a business has to pay irrespective of its profitability," he said. "You want to have that facility, whether you're renting it or you own it, you pay your property taxes. Doesn't matter if you're profitable."

Martire says there's no hope of lowering property taxes, however, if the state allows its temporary income tax hike to sunset. He says the state must first have adequate revenue in order to direct spending — like education funding — more equitably.

Senator Toi Hutchinson (D-Olympia Fields) says the finding is another reason to overhaul the state's tax system.

"Our tax code right now is old and antiquated and built for an economy that doesn't exist. It may have existed in 1970, but in 2014 it does not exist."

Hutchinson and a coalition of Democratic lawmakers are advocating for a graduated tax system, where the more you earn, the more you pay.