income tax

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Illinois workers get an added bonus once they retire: They don't have to pay taxes on pension or Social Security checks. It's one possible change the state could look to as it hunts for more money.

Illinois is a rare state that taxes income on a regular paycheck, but not on retirement.

Fiscal experts like the non-partisan Civic Federation say as Illinois' population ages, and there are more seniors, the government will increasingly lose out on a source of revenue.

Income tax space on a Monopoly game board
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Despite recent hype over the possibility of legislators putting questions on the November ballot to change the constitution, the Illinois House adjourned Wednesday without even voting on proposed amendments. Their lack of action means voters won't be asked whether they want to change how they're taxed.

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Illinois is one of only eight states with a flat income tax. The reasons can be traced to the state’s first-ever successful attempt at putting an income tax in place.  

An effort to change the current tax structure is underway, but supporters face a fast-approaching deadline.  

Illinois Department of Revenue

Gov. Bruce Rauner says he isn't a billionaire, but he's not far off. Me? I'm Amanda Vinicky, statehouse bureau chief for Illinois Public Radio, and let's just say I've got a better chance of walking on the moon than ever making a billion bucks.

But both Rauner and I -- as does everyone else who lives in Illinois, no matter how rich or poor -- pay the same state income tax rate. The constitution requires a flat tax.

Some Illinois Democrats are moving to change that. 

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All Illinois residents -- no matter how rich, no matter how poor -- pay the same income tax rate. Now a plan is afoot to change that, with a constitutional amendment, and to have the wealthy pay more.

During a speech in Chicago this week, Illinois House Speaker Michael Madigan was asked about the prospects for new taxes, while Governor Bruce Rauner said that he expects the budget stalemate to continue into the spring.   Despite the budget impasse, an agreement was made to send some money owed to Illinois municipalities, as well as to the lottery and Secretary of State.  Matt Dietrich of RebootIllinois.com joins the panel.

A year ago, Illinois' income tax rate fell by 25-percent. The top Democrat in the Illinois House is suggesting it go back up.

Income tax space on a Monopoly game board
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Commentary — Let’s be blunt: Illinois needs higher taxes.

That statement might come as a shock to citizens under the illusion that all would be well, if state leaders would just cut all the wasteful spending out of the state budget. 

Illinois Department of Revenue

Almost every time House Speaker Michael Madigan speaks to the press lately, he says that the state's estimated $6 billion deficit cannot be addressed through cuts alone.

Brian Mackey
mattpenning.com / WUIS/Illinois Issues

News Analysis — Illinois continues to be pummeled with bad budget news. The General Assembly’s nonpartisan budget analysts at the Commission on Government Forecasting and Accountability say income tax receipts will be down $1.9 billion in the next fiscal year. That’s thanks to the tax cut that took effect January 1, lowering the individual income tax rate from 5 percent to 3.75 percent.

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Your state tax refund could take longer to come in than usual. Security measures designed to prevent tax fraud are causing Illinois taxpayers to wait longer for their refund.

Terry Horstman of the Illinois Department of Revenue says the agency is working to fix the problem.

"As various tax schemes have been detected, we have tried to counter those schemes with additional software upgrades to our systems that help detect the fraudulent activity," Horstman said.

The federal government estimates Illinois had about $30 million in fraudulent claims last year.

Amanda Vinicky

Credit ratings agencies have taken notice of the court ruling on Friday that tossed out Illinois’ law reducing workers’ pensions. But they’re not worried enough to lower the state’s rating.

Illinois’ credit rating remains unaffected by last week’s court ruling, which found a landmark pension law to be unconstitutional. But agencies are watching.

Credit ratings are important as, the lower the rating, the more it costs the state to borrow.

It’s also an important indicator of a state’s relative fiscal health.

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A hike in Illinois’ income tax rate will begin rolling back at the end of this year, and a majority of Illinois voters are alright with that.

A new poll shows 56-percent of voters oppose making the increase permanent.

Respondents to the survey, which was done before the election by the Paul Simon Institute at Southern Illinois University, were asked that question fairly directly.

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Hannah Meisel/WUIS

  2014 is only halfway over, but Illinois' new fiscal year just began last week. The state closed out its year with a billion-dollar growth in tax revenue.

The state took in $32 billion in revenue this past fiscal year, more than $7.6 billion of that in sales tax. That's up almost 4.5 percent from last year.

Jim Muschinske, who analyzes revenues for the state's forecasting commission, says that's not amazing, but it's a healthy increase.

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Dan LoGrasso / WUIS

A recap of the end of the just-completed Spring Legislative Session.

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Dan LoGrasso / WUIS

No agreement so far on a state budget, while debate continues on whether or not to make the temporary state income tax permanent.

House Speaker Michael Madigan wants voters to weigh in on his so-called "millionaires' tax" at the November elections.

The referendum would ask if income greater than a million dollars should be taxed an additional three percent, with the money going to schools.

Earlier this year, Madigan tried to put this before voters as a constitutional amendment, but he says there wasn't enough support in the House.

Gov. Pat Quinn
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Illinois lawmakers return to Springfield Monday to begin the final two weeks of the spring legislative session. The big question remains whether Democratic leaders can convince enough rank-and-file lawmakers ... to make a higher income tax rate permanent.

Although Gov. Pat Quinn, Senate President John Cullerton, and House Speaker Michael Madigan all support making the temporary 5-percent income tax rate permanent — Madigan in particular has had a hard time getting fellow House Democrats to go along.

Brian Mackey / WUIS

  Taxes have been in the spotlight at the state Capitol this spring, most visibly the fate of the state's income tax rates. But another tax plan, floated by Governor Pat Quinn, is also attracting ire of Republicans and economists alike.

Governor Quinn's plan for the Illinois budget calls for extending the state's 5-percent income tax rate, instead of allowing it roll back.

It's coupled with a $500 property tax rebate for every homeowner in Illinois.

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How much you'll pay in state taxes next year remains an open question, even as the Illinois House Thursday approved dozens of spending bills, that rely on a permanently higher tax rate. It sets the stage for a budget battle, just weeks before legislators are set to adjourn for the summer.

The Illinois House convened at 8 o’clock Thursday morning, and spent most of a very long day on the budget. Lawmakers began with a debate on funding Illinois' public education system, giving schools a slight increase over this year.

Brian Mackey / WUIS

Republicans are not happy with the budget pushed through the Illinois House Thursday by Democrats. But Democrats counter that Republicans aren't offering any proposals of their own.

House Republicans denounced Democrats for passing an out-of-balance budget that relies on a tax increase.

Democrats, however, say Republicans only want to criticize, and haven't put forth a plan of their own.

Representative Jay Hoffman (D-Swansea) says he searched for the Republican budget everywhere. He even asked his dog.

Brian Mackey / WUIS

Illinois House Democrats are assembling a budget plan for state government. But a big piece of the puzzle is being left out.

The plan makes it seem obvious House Democrats have heeded Gov. Pat Quinn's call to keep the income tax rate at 5 percent. Except they won't actually say that out loud.

Rep. Greg Harris of Chicago typified the coyness.

"This always comes own to the last couple weeks," he says, "and we have to look at different sources of revenue. We have to look at: Do we add here? Do we cut there?"

Members of the Illinois House are spending Wednesday afternoon in a series of budget hearings. The House Speaker says that's meant to lead the way to an income tax vote.

The hearings all focus on one thing: Illinois' next spending plan.

In particular, one that spends money as if Illinois' income tax rate is still 5-percent -- even though the rate is set to drop halfway through the next fiscal year.

Critics say it's illegal for the House to go forward spending at higher levels, without first voting to extend the higher tax.

Brian Mackey/WUIS

After a weekend break, Senators will return to Springfield this afternoon, as the calendar draws closer to the scheduled May 31 adjournment.

While the end of the month is a key date, it's another one, about a half a year away, that will largely guide much of what happens these next few weeks: the November election.

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The Illinois House will take the lead on whether Illinois keeps its 5 percent income tax. It's scheduled to roll back at the end of this year unless legislators take action.

It's happened in the past. The Illinois Senate will pass a controversial measure -- like a tax hike -- only for it to languish in the House.

Not this time.

Senate President John Cullerton says the Senate will vote on the tax question if and only if it first passes the House.

 Two major Democratic initiatives are still short the votes needed to pass, at least in the House, as the General Assembly heads into the final stretch of its spring session.

    

How to deal with Illinois' income tax rate is arguably the biggest issue looming over Illinois politics.

The 5-percent rate is set to rollback in January, but Gov. Pat Quinn wants the higher rate extended permanently, an approach favored by the Democratic leaders of the legislature.

  A tax on millionaires is advancing through the General Assembly ... at the expense of a progressive income tax.

The so-called "Millionaire's Tax" would levy a three percent surcharge on income over a $1 million. House Speaker Michael Madigan says that should raise about a billion dollars, which Illinois would send exclusively to schools.

"My judgment was that it helps education and it calls upon those in the society that are better able to help fund education than others."

Hannah Meisel/WUIS

  Plenty can, and will, happen before voters go to the polls in November to chose their next governor. But a central theme of the campaign emerged Wednesday, when Gov. Pat Quinn proposed making permanent what was supposed to have been a temporary hike in the state's income tax. His Republican opponent, Bruce Rauner, favors letting the increase lapse. Their competing visions mean a lot is at stake ahead of the upcoming election, as well as for the state's future.

housedem.state.il.us

Following an announcement by Governor Pat Quinn in his budget speech Wednesday, Illinois House Speaker Michael Madigan says he plans to call a vote on making the state's tax increase permanent.

Madigan is chairman of the state Democratic party and has served as speaker for nearly 30 years.

He made the comments during an interview with Illinois Public Television following Gov. Pat Quinn's budget address in Springfield on Wednesday.

Illinois residents would continue paying a 5-percent income tax rate under the much-anticipated budget proposal Governor Pat Quinn presented today. 

Illinois' income tax rate is supposed to expire in January, midway through the fiscal year.

Gov. Quinn says that would cause "savage cuts" to schools and other critical state services.
Instead, Quinn wants to make the higher income tax rate permanent.

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