Taxes in Illinois
Upcoming Issues: Given the ongoing budget problems in Illinois, and an aversion to cutting spending by those in control, it seems 2009 may be ripe for a serious discussion on raising some form of tax. Of course, the two biggest revenue generators include the income or sales tax. However, the governor has repeatedly claimed his opposition to increasing either of those taxes. Perhaps one of the biggest threats is the passage of a service tax. Currently Illinois does not charge sales tax on labor. This is an important benefit for small businesses that are in the service sector like beauticians, auto repair shops, lawyers, realtors and many others. Illinois currently only taxes 17 services of the 164 taxable services. According to a report by the Commission on Government Forecasting and Accountability, a broad based service tax in Illinois could bring in $5.7 billion in tax revenue. A service tax has been introduced in the past, often associated with either a comprehensive tax package or as a part of the property tax "swap" for education. Another likely suspect is a proposal to raise the personal and corporate income tax. Currently Illinois has a low, flat income tax (3 percent for personal and 4.8 percent for corporate). Many lawmakers believe a flat income tax is unfair and would like Illinois to have a progressive income tax structure that allows the rate to increase along with a person's income level. Of course, this would require a change in Illinois' constitution.
NFIB Position: NFIB opposes all new tax increases.
Issue Status: No legislation has been introduced yet for the 2009 legislative session.
