QUINN, DEMOCRAT LEADERS SEEK MAJOR TAX INCREASE
As the 96th General Assembly winds to a close, Governor Pat Quinn and Democrat leaders are working behind closed doors to fashion a reported 67 percent increase in the state’s personal income tax and a 46 percent increase in the state’s income tax for business.
Republicans have not been asked for their input in these discussions and are generally opposed to any hike in income taxes.
Governor Quinn, Senate President John Cullerton of Chicago and House Speaker Michael Madigan of Chicago were keeping details of their planned 67 percent tax hike under wraps at the close of the week, but details that did emerge indicated income taxes could be increased from the current flat 3 percent to at least 5 percent.
The corporate tax hike increases from 4.8% to 7%. According to the non-partisan Tax Foundation, this will be the third highest corporate income tax in the country. Only Minnesota and Pennsylvania have higher rates.
Both tax increases are effective January 1, 2011.
Senator Dale Risinger noted that the Illinois Democrats’ tax hike would be imposed just weeks after President Barack Obama and Congressional Republicans agreed to a temporary cut in employment taxes to put more money in workers’ pockets and stimulate the economy. The Illinois tax hike would more than offset the federal tax break, deny Illinois workers the small pay increase from the federal tax cut and effectively isolate recession-battered Illinois from the benefits of the federal stimulus.
LAWMAKERS PASS MEDICAID REFORMS
On a more positive note, the General Assembly overwhelmingly approved a major Medicaid reform measure that Senator Risinger said is a good step forward in restructuring Illinois’ health care program for low-income citizens and persons with disabilities. The Medicaid reform was the product of a bipartisan committee process and incorporated changes long advocated by GOP lawmakers.
One of three bipartisan reform efforts announced last year, the Medicaid reform measure appears to be the only one that will move forward before the next legislative session begins. For years, the Senate Republican Caucus has said the state simply can’t keep up with the growth of the Medicaid program, which has consumed more of the budget each year. Currently, there are 2.8 million Illinois residents enrolled in Medicaid – an all-time high.
House Bill 5420, which now proceeds to Quinn for consideration, targets inefficiencies in the system that will not only help contain the unmanageable growth of the program, but also ensure program recipients are receiving the best possible health care.
In particular, the measure embraces the national trend toward managed care principles. Senate Republicans have consistently urged a movement toward managed care, which has been shown to reduce costs while improving patient care. If signed into law, utilization of managed care principles will increase dramatically over the next four years. Eventually 50 percent of all people will be required to be in a system of care coordination, or managed care.
The measure also seeks to phase out the “Section 25” loophole that has allowed the state to pay Medicaid providers late. Over the years, this loophole has enabled Illinois government to defer payments to doctors, pharmacists, hospitals and nursing homes while portraying deficit spending as “balanced.” House Bill 5420 will eliminate the ability of state government to do that.
Notably, House Bill 5420 imposes a two-year moratorium on any new Medicaid programs or expansions of Medicaid programs. In the past, Democrat leadership has been reluctant to impose stricter eligibility and verification measures for Medicaid enrollees, which has contributed to the unsustainable growth of the program.
Senator Risinger noted the bill also requires more extensive income reporting to better reflect an applicant’s true income, mandate proof of Illinois residency, and require active redetermination on an annual basis to verify that a Medicaid enrollee still qualifies for assistance.
Another key provision will impose reasonable income restrictions on the state’s “All Kids” programs, which previously did not contain any income limits. An Auditor General review last year found that even at the highest income levels, which could exceed $100,000, taxpayer dollars were subsidizing health insurance costs.
Similar bipartisan committees that focused on workers’ compensation and education reform appear stalled as Democrat legislative leaders and the Governor refocused their efforts on raising taxes.
INTERNET RETAILERS WOULD CHARGE SALES TAX
The General Assembly also advanced legislation to reclaim millions in sales taxes the state currently fails to capture from Internet shopping sites. If House Bill 3659 is signed into law, Internet retailers like Amazon.com and Overstock.com could be required to charge customers Illinois’ retail sales tax, which would then be given to the state.
At this time, Illinois can only collect sales taxes from businesses that are physically located in the state, though individuals are supposed to report and pay state tax on online purchases. The measure would allow the state to use “affiliate” relationships to claim that a vendor has a physical location in the state and make it the responsibility of the online merchant to pay sales taxes due to Illinois.
Opponents said online retailers could circumvent the law by simply canceling affiliate relationships with Illinois-based businesses. They also cited legal concerns associated with the measure; similar laws in other states have been subject to legal appeals. However, proponents contend that in addition to the economic benefit to the state, it’s an issue of parity—online businesses should be held to the same standards as traditional businesses.
Contact Senator Dale Risinger at
5415 North University, Suite 105 | Peoria , IL 61614 | Phone: 309-693-4921
http://www.risinger.senategop.org | senatorrisinger@yahoo.com
The Illinois Senate was called back to Springfield November 4 to consider a contentious pension bonding measure, at an expense of tens of thousands of taxpayer dollars, but the bill was not heard on the Senate floor and no vote was taken, according to Senator Dale Risinger.
Though proponents of the measure said the massive borrowing plan is comparable to previous measures, Senator Risinger explained there are significant differences.