Politics

CHICAGO (CBS) ― Gov. Pat Quinn confirmed Friday that he plans to raise taxes on some Illinois residents to combat deficits in a difficult state budget, and called for broader tax reform.

Quinn said Friday that he plans to hike taxes for families that make more than $56,000 a year.

But Quinn contends his income tax proposal would amount to a tax cut for millions of Illinoisans by increasing the personal exemption to let them shield more income from being taxed.

"It's very important that we raise taxes in a fair way for the people of Illinois in order to pay for important core priorities – whether it be safety, health, education, transportation, and so on," Quinn said at a news conference at the James R. Thompson Center Friday.

He did not say exactly how much taxes would go up, but the Chicago Tribune reported Friday that he was looking for a hike of 50 percent, from a rate of from 3 percent to 4.5 percent

Quinn said when the Illinois income tax was first instituted 40 years ago, the personal exemption was generous, but it did not increase with cost of living. Originally, Quinn said, the personal exemption in Illinois was $1,000. It has since risen to $2,000. 

Earlier reports have said Quinn hopes to raise the standard tax exemption up to $6,000 per person from $2,000, to help low- and middle-income families.

If the personal exemption were increased, taxes could be cut for many Illinoisans, Quinn said.

"We're not going to take multiple people – people who are just making it; people who are living from check to check – and we're not going to tax them into poverty," Quinn said.

Illinoisans have had a lower income tax rate than other states for some time. This would be the first increase in 20 years.

In addition, some business tax breaks would be eliminated, and Quinn promises to tighten state government spending.

The income tax increase could bring in nearly $4 billion. The budget deficit is expected to be more than $9 billion by the summer of 2010. 

Quinn has been hinting about the problems in the state budget this year for some time.

Taxpayers in Chicago weren't surprised, but many said the timing is poor.

"We already can't afford to pay the taxes – people who have homes and what have you now, so it's going to be really rough," said Nadeja Borras.

"Already, the taxes are pretty high, so it could be a disadvantage for the State of Illinois," said Sara Mirarefi.

But some Chicagoans thought a tax increase might be necessary.

"I think it's about time somebody's got the guts to go in there and say, 'Hey, we have to increase taxes,'" said Jim Kauss. "We have to pay for this. it's not free."

Quinn said the taxes would be structured in such a way that those suffering the most would not be affected. He pointed to what he called "a principle that's as old as the Bible, that taxes should be based on ability to pay."

Quinn said he would hold the lines on gasoline taxes, although state lawmakers have been talking about raising them to pay for road and bridge construction. Fees on driver's licenses and license plate stickers may also go up.

This is not a done deal. Dozens of key players will weigh in before a tax increase this big will become law. Quinn's proposal is a starting point.

State Sen. Matt Murphy, R-Palatine, opposes an income tax increase. He said the state should cut spending on items such as Medicaid and education, if necessary, to get through the tough times. Murphy also says policymakers should revive controversial discussions of a Chicago casino to raise money for a capital program.

"I don't like that we're there, but that's where we're at," Murphy said.

Ousted Gov. Rod Blagojevich issued a written statement Friday denouncing the tax-increase idea. At the time of his impeachment, he claimed lawmakers were getting him out of the way to hike taxes.

"When Pat Quinn and I ran as a ticket we promised the people not to raise taxes," Blagojevich said. "For six years I kept that promise. It took him less than six weeks to break it."

CBS 2's Joanie Lum, Mike Flannery and the STNG Wire contributed to this report.

(© MMX, CBS Broadcasting Inc. All Rights Reserved.)

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