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Indiana University

IU expert: Illinois income-tax increase is “honest, transparent” but politically risky

January 13, 2011
Bloomington, Indiana --

The Illinois legislature voted in a lame-duck session this week to increase the state's personal income tax from 3 percent to 5 percent in order to help close a budget deficit projected to hit $15 billion.

John MikesellJohn Mikesell, Chancellor's Professor and a public finance expert at the Indiana University School of Public and Environmental Affairs, says the move, though politically controversial, makes sense in light of Illinois' budget problems.

"The income tax increase is an honest, equitable and transparent approach to generating revenue," Mikesell says. "The finances of the state of Illinois are in such sad condition that it could no longer use a Band-Aid approach or chump change revenue options.

"In today's political climate, such an honest approach is quite dangerous, and I do not see any sort of tidal wave of states likely to follow," he adds. "Certainly there will be some negative impact on economic activity in Illinois -- but probably less impact than doing nothing to correct the fiscal imbalance and waiting for total catastrophe."

As to whether it was appropriate for state legislators to take such an action in a lame-duck session, with some new lawmakers about to be sworn in, Mikesell says: "They were the legally elected and serving members of the state legislature. As such, they had authority to legislate until their terms were over."

To speak to Mikesell, please contact Jana Wilson at the School of Public and Environmental Affairs, 812-856-5490 or wilsonjs@indiana.edu.



Web Version:
http://newsinfo.iu.edu/news/page/normal/16934.html?emailID=16934