Higher sales tax to replace ‘opportunity tax’ as part of 'grand bargain' proposal
The “grand bargain” proposal being pushed as a responsible solution to Illinois’ ongoing budget stalemate now includes provisions calling for higher state sales taxes on everything from food to drugs.
In Senate sessions that resumed this week, the sales tax initiative was introduced as an alternative to the so-called “opportunity tax,” which was vehemently opposed by many of the state’s business leaders over its design to impose a tariff of up to $15,000 on companies for the “privilege” of doing business across the state.
Led by Senate President John Cullerton (D-Villa Park) and Minority Leader Christine Radogno (R-Lemont), the full Senate is now expected to take a structured vote on at least some of the 12 bills being served up as part of the overall proposal.
What lawmakers might encounter by the time parts of the bill reach the Senate floor is opposition on par with what they incurred from business leaders and others over the idea of an “opportunity tax.”
The Illinois Policy Institute (IPI) pointed out that a recent study conducted by the nonpartisan Tax Foundation found that Illinois’ combined state and average local sales tax already ranks as the highest in the Midwest at 8.64 percent.
Researchers also concluded that the state has the seventh-highest combined sales tax rate in the country, ahead of much larger metropolises like New York and California. In addition, IPI leaders have long contended sale taxes are regressive in nature, particularly inflicting undue harm on the low-income residents they are touted as being designed to benefit the most.
Still, IPI claims that as many as 20 different branches of local government have raised sales taxes since the start of the new year, including slapping a tax on plastic bags and planning for one on sodas and other sweetened beverages later this year.
Researchers contend that this largely accounts for why residents are leaving the region in troves, with the state now owning the worst out-migration rate in the Midwest, losing some 114,000 residents over a yearlong period beginning in July 2015.
As for more of the intimate details of the proposed "grand bargain," Republicans argue it doesn’t go far enough in scaling back the massive costs of state workers’ compensation plans nor the mounds of cash routinely doled out in excessive government spending. They also cringe at the thought that the plan would add an additional $7 billion in new borrowing.
But, even as they seem able to agree on little else, virtually every politician in Springfield admits something needs to happen to end the nearly two-year budget impasse that has thrown the entire state into a deep and widening abyss.
"Members still have some trepidations about the impact it's going to have on them personally," Sen. Donne Trotter (D-Chicago) said. "That's what we do. We take hard votes down here, and these are hard times, so it necessitates us doing some things that we wouldn't do under normal circumstances. But I believe the times have pushed us to that point, that something has to be done, and this is one of the ways to do it."
With Gov. Bruce Rauner and House Speaker Michael Madigan having locked horns from day one on the issue of a budget -- with little progress to show for it -- Cullerton and Radogno began their compromise negotiations without either one being part of the mix.
Now, however, Cullerton is calling on Rauner to raise his voice on the issue, contending a push from the governor in the right direction could make a world of difference in finally making the bitter stalemate between him and Madigan a thing of the past.
Cullerton and other supporters also stress that the plan calls for such compromise legislation as a two-year freeze on property taxes, pension reform enactments and a measure of income tax increases.