advertisement

Harmon: Raise tax rates for incomes over $180,000

Clarification: Income above $180,000 a year would be taxed at a higher rate under a plan offered Tuesday by a leading suburban Democrat.

Income above $180,000 a year would be taxed at a higher rate under a plan offered Tuesday by a leading suburban Democrat.

State Sen. Don Harmon, an Oak Park Democrat, proposed eventual tax rates if lawmakers and voters decide to abandon the state's flat income tax and create a system that taxes people who make more money at higher rates.

As Gov. Pat Quinn is set to deliver his budget plan to lawmakers today and the 2011 income tax hike is set to expire at the end of the year, taxes are set to take center stage on lawmakers' agendas.

Harmon's plan to amend the state constitution would create three tax brackets.

Those making up to $12,500 would pay a 2.9 percent income tax rate. Income from that level to $180,000 would be taxed at a 4.9 percent rate, slightly less than Illinois' current 5 percent. Anything more would be taxed at a 6.9 percent rate.

Both sides have done battle over the idea of a graduated tax in recent months, with both arguing it would be a blow to the middle class. Previously, specific rates were not available.

"The lack of specifics has been the biggest complaint I have heard from my colleagues, and from the general public. The specifics I am offering today should give people comfort," Harmon said.

Republicans have already pushed back.

State Sen. Matt Murphy, a Palatine Republican, said Democrats in recent weeks have tried to make Illinois' budget picture look even more dire than it is in an attempt to keep the tax increase or raise rates.

"I believe they want to get as much taxpayer money as they can," Murphy said.

Illinois' 5 percent income tax rate is set to drop to 3.75 percent Jan. 1. Under Harmon's plan, all but the very poorest would pay a higher rate than that.

Harmon's plan has competition among Democrats, too. House Speaker Michael Madigan last week proposed creating an additional 3 percent tax on anyone making more than $1 million a year.

Harmon said it is possible to implement both plans.

"These two proposals are completely compatible, but not related. They could work together, they could work independently," Harmon said.

Harmon said his plan would generate $23 million less in revenue compared to the current tax rate of 5 percent.

Compared to the tax rate set to take over in January, the state would make more than $1.5 billion in revenue, Harmon said.

Amending the state constitution requires approval from both lawmakers and voters.

Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.