Nation's Oldest Taxpayer Group Slams Illinois Assembly's Tax-Hike Vote; Predicts Fiscal, Economic Quagmire

ALEXANDRIA, Va., Jan. 12, 2011 /PRNewswire-USNewswire/ -- Today's enactment of a 67 percent personal and a 46 percent business tax hike, on top of earlier passage of a controversial tax on online shopping, won't solve Illinois' deficit problem and may actually make matters worse: that's the message from the National Taxpayers Union (NTU), America's oldest non-partisan grassroots taxpayer group. NTU has 362,000 members nationwide and more than 14,000 in Illinois.

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John Stephenson, NTU's State Government Affairs Manager, said, "The General Assembly's votes to raise taxes and impose new ones add up to a reckless, shameful, and ultimately self-defeating response to the budget crisis gripping the State. Once again elected officials, some of whom won't even be in office after today, ignored fiscal reality and instead decided to make consumers and businesses pay for their chronic overspending habit, especially on government pensions. Neither the bogus spending controls nor the supposedly 'temporary' nature of the tax hikes contained in this package change that reality."

The income tax hike means that Illinois will go from having one of the nation's lowest flat personal income tax rates to one of the highest. Based on previous research from the Illinois Policy Institute, job losses to the state's economy from this one change alone would far exceed 100,000 and could approach 200,000. And thanks to the new online tax, Illinois websites that engage in the business of "affiliate marketing" – the practice of linking to another website per a referral agreement – for an out-of-state online retailer will have to begin the burdensome task of collecting sales and use taxes on purchases, a clear violation of U.S. Supreme Court precedent.

Stephenson pointed out that states that have raised income taxes have lost population (such as Maryland), or failed to raise the desired revenue (such as Oregon). Moreover, he noted, states that have tried to go after out-of-state online retailers through affiliate tax schemes, such as New York, North Carolina, and Rhode Island, have raised little or no revenue, seen businesses close as retailers shut down affiliates programs, and been subject to costly litigation.

Stephenson concludes, "Illinoisans already have to bear the 14^th-highest state and local tax burden per capita in the nation. It makes no sense to pile more onto such a heavy load, especially in a down economy. Unless Governor Quinn and the State Legislature agree to reverse their destructive tax policies and significantly reduce state spending, residents are in for even tougher times ahead."

NTU is a nonpartisan, nonprofit citizen organization founded in 1969 to work for lower taxes, smaller government, and economic freedom at all levels. Note: For more information on NTU, visit www.ntu.org.

SOURCE National Taxpayers Union