Partial Rollback In State Income Tax May Be Mixed Blessing
(CBS) -- Illinois taxpayers get a break starting tomorrow, partial rollback of the 2011 personal and corporate tax increases.
CBS 2 Chief Correspondent Jay Levine explains why it is only a mixed blessing because the money has to come from somewhere, and the Rauner administration today is warning of "painful decisions" ahead.
Owners of small businesses think it is about time.
"It seems to put a lot more money in our pocket, especially the business owner," said restaurant owner Vince Tan.
"We can lower the prices for the consumer, hopefully they can get an advantage for it and hopefully it will increase the profit," said business owner Raj Gobel.
When lawmakers passed the controversial tax hikes, from three to five percent for personal returns, they called it temporary. Yet part of it was permanent, so tomorrow's rollback will only be to 3.75 percent. The state says that comes to $900 a year for the average taxpayer.
Of course the flip side of that is where is the money coming from. Every dollar that goes into someone's pocket has to come from somewhere.
Governor Pat Quinn didn't get his extension and has made no provision for the resulting $1.5 billion shortfall for the rest of the budget year.
"We've been asking for information so we can come in to office and properly manage the government going forward," Governor-Elect Bruce Rauner said.
Helping the Governor elect, a source says "...manage our way around the deficit. There will be painful decisions."
Among those painful decisions being considered, we're told, cutting Medicaid coverage and reducing state university spending.
One other possibility, which might be possible given plunging gasoline prices, is to increase the state gasoline tax by a dime a gallon. That could raise several hundred million dollars a year and replace at least part of the money now earmarked for our pockets rather than the state treasury.