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updated: 3/27/2014 6:21 PM

Illinois House gets millionaire tax plan moving

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  • House Speaker Michael Madigan won initial approval for his so-called millionaire's tax Thursday.

      House Speaker Michael Madigan won initial approval for his so-called millionaire's tax Thursday.
    Associated Press File Photo

  • Demonstrators at the Capitol Thursday asked lawmakers to consider a plan that would raise tax rates on people who have higher incomes.

       Demonstrators at the Capitol Thursday asked lawmakers to consider a plan that would raise tax rates on people who have higher incomes.
    Zachary White | Staff Photographer

 
By Marty Hobe
mhobe@dailyherald.com

SPRINGFIELD -- Illinois lawmakers chose to advance an additional income tax on millionaires over a broader shift of taxes toward the wealthy Thursday, setting the tone for months of debate over how much people should pay to help the state stabilize its finances.

The House revenue committee voted 6-4 for Speaker Michael Madigan's plan to add a new 3 percent tax on income of more than $1 million, sending the measure to the full House where it could be debated as early as next week.

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Minutes later, the same panel rejected a broader graduated income tax proposal, which resembled one floated earlier this week in the Senate by state Sen. Don Harmon, an Oak Park Democrat.

The current state income tax rate is 5 percent for everyone. Harmon's plan would have raised tax rates on incomes more than $180,000 to 6.9 percent.

Republicans voted against both changes to the income tax structure, arguing a state that already has an unemployment rate higher than the national average shouldn't be raising taxes on anyone. Many small business owners pay the individual income tax and take in more than $1 million a year.

State Rep. David Harris, an Arlington Heights Republican, said Illinois has a tough time convincing "the people who take the risks to start companies and create jobs" that the state is a "friendly place for them."

"Those folks who start businesses and hope to become millionaires are saying, 'Illinois is not a place I want to be,'" Harris said.

As the committee was voting down the graduated income tax, a group of demonstrators gathered outside the committee room in an attempt to persuade lawmakers to vote yes for what they called a "fair tax."

Committee members struggled to voice their no votes, having to yell into their microphones to speak over the noise from the crowd outside.

In voting no on the tax proposal, the House is sending a message to Harmon about how his plan would likely be received. He said he would continue to push forward on his proposal.

Madigan's millionaires tax would need the support of 60 percent of lawmakers to be put on the November ballot, where voters would have to approve it.

The early vote shows a sign of life for the controversial plan a day after Gov. Pat Quinn also proposed making the state's 2011 tax hike permanent.

The $1 billion in new money created by Madigan's plan would be directed toward schools.

"Within our society and state, those who earn over $1 million are better equipped than others to support education," Madigan said.

• The Associated Press contributed to this story.

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