Update: A Tax Compromise Offered in Illinois

January 23, 2017

Earlier this month I highlighted a potential tax compromise brewing in Illinois. State senate Republicans and Democrats released a proposal to increase Illinois’s individual income tax and corporate income tax, expand the state’s Earned Income Tax Credit, and create a statewide sugary beverage tax, among other things. The Illinois Senate Revenue Committee will hear the proposal tomorrow, but it appears that the proposal could be changing, making the plan, and Illinois, even less competitive in the process.

Under the original proposal, the individual income tax would increase from 3.75 to 4.95 percent, but according to the Northwest Herald, the proposal change would likely increase the rate from 3.75 to 5.25 percent, an increase of 40 percent.

This change, if approved, would make Illinois even less competitive. According to the State Business Tax Climate Index, Illinois would fall from 23rd best tax climate to 28th best. Full results are available below.

  Current Proposal #1 Proposal #2
Total 23rd 27th 28th
Corporate 26th 43rd 43rd
Individual 10th 10th 12th

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