(Alexandria, VA) – Today’s enactment of a 67 percent personal and a 46percent business tax hike, on top of earlier passage of a controversial tax on online shopping,won’t solve Illinois’ deficit problem and may actually make matters worse:that’s the message from the National Taxpayers Union (NTU), America’s oldestnon-partisan grassroots taxpayer group. NTU has 362,000 members nationwide andmore than 14,000 in Illinois.
John Stephenson, NTU’s State GovernmentAffairs Manager, said, “The General Assembly’s votes to raise taxes and imposenew ones add up to a reckless, shameful, and ultimately self-defeating responseto the budget crisis gripping the State. Once again elected officials, some ofwhom won’t even be in office after today, ignored fiscal reality and insteaddecided to make consumers and businesses pay for their chronic overspendinghabit, especially on government pensions. Neither the bogus spending controlsnor the supposedly ‘temporary’ nature of the tax hikes contained in thispackage change that reality.”
The income tax hike meansthat Illinois will go from having one of the nation’s lowest flat personalincome tax rates to one of the highest. Based on previous research from theIllinois Policy Institute, job losses to the state’s economy from this onechange alone would far exceed 100,000 and could approach 200,000. And thanks tothe new online tax, Illinois websites that engage in the business of “affiliatemarketing” – the practice of linking to another website per a referralagreement – for an out-of-state online retailer will have to begin theburdensome task of collecting sales and use taxes on purchases, a clear violationof U.S. Supreme Court precedent.
Stephensonpointed out that states that have raised income taxes have lost population(such as Maryland), or failed to raise the desired revenue (such as Oregon). Moreover,he noted, states that have tried to go after out-of-state online retailersthrough affiliate tax schemes, such as New York, North Carolina, and RhodeIsland, have raised little or no revenue, seen businesses close as retailersshut down affiliates programs, and been subject to costly litigation.
Stephenson concludes, “Illinoisans already have tobear the 14th-highest state and local tax burden per capita in thenation. Itmakes no sense to pile more onto such a heavy load, especially in a downeconomy. Unless Governor Quinn and the State Legislature agree to reverse theirdestructive tax policies and significantly reduce state spending, residents arein for even tougher times ahead.”
NTUis a nonpartisan, nonprofit citizen organization founded in 1969 to work forlower taxes, smaller government, and economic freedom at all levels. Note: For more information on NTU, visit www.ntu.org.