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Oppose the Massive Income and Cigarette Tax Hikes!

Dear Legislator:

     Onbehalf of the National Taxpayers Union’s 14,000 members in Illinois, I urge youto reject Governor Quinn’s proposal to raise the income and cigarette taxrates. A multibillion-dollar tax hike on Illinoisans to finance more borrowingwill do untold damage to the state’s fragile economy and will not solve theroot of the state’s fiscal problem, which is massive overspending.

     GovernorQuinn’s proposal to raise the personal income tax by 75 percent and nearlydouble the corporate income tax will cost the state jobs when it can ill affordmore unemployment. An Illinois Policy Institute study estimates that an income taxchange alone will cost the state at least 217,000 jobs. To put the personalincome tax hike in perspective, the Institute has calculated that a family with two kids earning $80,000would pay $1,620 in higher taxes, on top of the $2,160 they’re already payingin state income taxes. Further, the corporate income tax hike will likely hastenthe departure or hamper the expansion of Illinois businesses, compounding theeconomic problems of the state.

     Additionally, raising the cigarette tax by $1 per pack – a102 percent increase – will vault Illinois from having the 29th-highestto at least the 14th-highest state-level tax in the nation. Cigarette tax hikes are not good public policy because suchtaxes disproportionately burden the poor and are unreliable sources of revenue.The poor are more likely to smoke so they feel the burden of the tax more thanothers. As tax rates rise, people buy less or seek out cheaper alternativesfrom neighboring jurisdictions with lower tax rates. Moreover, projectedcollections from cigarette tax hikes are notoriously optimistic. Illinoiscigarette tax revenues are currently down $41 million (or seven percent) since2007. New Jersey reported a $52 million shortfall in revenues after it raisedits cigarette tax by 17.5 cents. Despite boosting its cigarettetax by 50 cents last year, the District of Columbia reported that it collected$15 million less than expected, and $7.6 million less than it collected prior to the tax hike. Other states,including Arkansas, Maryland, Mississippi, and Rhode Island, have also reportedgaps in revenue collections following tobacco tax hikes.

     Illinois faces a serious fiscal problemand needs to undertake equally serious reforms, especially reforms to itsbloated state budget and burdensome tax code. It should not add to thecomplicated tax burden by raising billions in taxes to finance billions more inborrowing. Therefore, our members hope that you will reject Governor Quinn’sproposal to increase taxes.

Sincerely,

JohnStephenson
State Government AffairsManager