a c t F i n d e r

F
2011 Tax Hike Is the Largest in Illinois History
State will collect over $7 billion in new taxes
Myth
The January 2011 tax hike was a moderate tax increase.
Fact
This tax hike is the largest in state history.
Budget & Tax Brief

Lawmakers raised the personal income tax rate Graphic 1. Additional Tax Hike
by 67 percent and the corporate income tax rate Revenue Projected for Fiscal
by 46 percent in a late night, lame-duck session Year 2012
in January 2011. This legislation also reinstated
New Revenue
the estate tax and suspended the net operating Tax Category State Fiscal Year
loss deductions for corporations.1 2012
Individual Income Tax $5,828,000,000
The Illinois Policy Institute’s report “Leaving
Illinois: An Exodus of People and Money” Corporate Income Tax $686,000,000
showed that between 1991 and 2009, Illinois Suspension of Net Operating
$312,000,000
lost more than 1.2 million residents to other Loss
states—more than one resident every eight Estate Tax $183,000,000
minutes.2 This tax increase will only send more Total $7,009,000,000
people to the exits.
Source: Commission on Government Forecasting and
The 2011 tax hike is the largest income tax Accountability.3
increase in state history. This increase is rivaled
in size and scope only by the tax grab that billion (adjusted to real 2010 dollars). In fiscal
created the state income tax in August 1969. year 2012—the first, full fiscal year following
In the first fiscal year following the creation of Illinois’s latest tax hike—new income tax
the state income tax, new revenue totaled $4.1 revenue is anticipated at $6.5 billion. Thus,

Graphic 2. Revenue Generated by Income Tax Creation Compared to

Additional Revenue Generated by 2011 Income Tax Hike
State Fiscal Year 1971 State Fiscal Year Percentage
New Revenue
(inflation-adjusted) 2012 Increase
Individual Income Tax $3,413,539,081 $5,828,000,000 70.7%
Corporate Income Tax $683,865,889 $686,000,000 0.3%
Total $4,097,414,970 $6,514,000,000 59.0%

Note: State Fiscal Year 1971 data has been adjusted to 2010 dollars using GDP deflator figures from the Bureau of
Economic Analysis and Illinois Policy Institute calculations.
Source: Commission on Government Forecasting and Accountability4, Bureau of Economic Analysis5 and Illinois Policy
Institute calculations.

Amanda Griffin-Johnson is a Public Policy Analyst at the Illinois Policy Institute. The Illinois Policy Institute’s
Fact Finder series aims to debunk myths about public policy issues that affect Illinois.
 Page 2 of 2
Graphic 3. New Illinois Income Tax Revenue Per Capita
New Revenue Per State Fiscal Year 1971 Percentage
State Fiscal Year 2012
Capita (inflation-adjusted) Increase
Illinois Population 11,202,397 12,830,632 14.5%
Tax Hike Revenue Per
$365.76 $507.69 38.8%
Capita
Note: State Fiscal Year 1971 data has been adjusted to 2010 dollars using GDP deflator figures from the Bureau of
Economic Analysis and Illinois Policy Institute calculations.
Source: U.S. Census Bureau6, 7 and Illinois Policy Institute calculations.

Graphic 4. Illinois Income Tax Rate History

Effective Date Individuals % Change Corporations % Change
August 1, 1969 2.5% - 4.0% -
January 1, 1983(1) 3.0% 20% 4.8% 20%
July 1, 1984 2.5% -17% 4.0% -17%
July 1, 1989(2) 3.0% 20% 4.8% 20%
July 14, 1993(3) 3.0% 0% 4.8% 0%
January 13, 2011(4) 5.0% 67% 7.0% 46%
Despite (1) First 20 percent surcharge.
population (2)
(3)
Second 20 percent surcharge.
Rate made permanent, retroactive to July 1, 1993.
growth since (4) Rate retroactive to January 1, 2011.
Source: Illinois Department of Revenue10, 11 and Illinois Policy Institute calculations.
the income
the revenue generated by the 2011 tax increase is 59 appealing destination for the entrepreneurs,
tax was percent higher than the revenue from the very first businesses and workers needed to help the
first created, income tax. economy flourish. Responsible spending and
lower taxes are the first steps to getting Illinois
the January Despite population growth since the income back on the path to prosperity.
tax was first created, the January 2011 tax hike
2011 tax also remains the largest tax hike in Illinois Endnotes
hike also history on a per capita basis. As Graphic 3
shows, the new revenue for fiscal year 2012 is
1 Illinois Public Act 096-1496, http://ilga.gov/legislation/publicacts/
fulltext.asp?Name=096-1496.
remains projected to be nearly 40 percent higher than 2 Scott Moody, “Leaving Illinois: An Exodus of People and Money,” Il-
linois Policy Institute, Jan. 12, 2011, http://illinoispolicy.org/news/article.
fiscal year 1971 on a per capita basis.
the largest asp?ArticleSource=3736.
3 Commission on Government Forecasting and Accountability, “Monthly
tax hike Rather than implementing necessary spending Briefing,” January 2011, http://www.ilga.gov/commission/cgfa2006/
Upload/0111revenue.pdf.
reforms to address the state’s budget deficit, the
in Illinois lame-duck legislature further burdened Illinois
4 Commission on Government Forecasting and Accountability, “Monthly
Briefing,” January 2011, http://www.ilga.gov/commission/cgfa2006/
history on taxpayers. As the “Leaving Illinois” study
shows, Illinois is already losing taxpayers to 40
Upload/0111revenue.pdf.
5 Bureau of Economic Analysis, “Table 1.1.9. Implicit Price Deflators
a per capita of the other 49 states and every border state.8 for Gross Domestic Product,” U.S. Department of Commerce, http://www.
bea.gov/national/nipaweb/TableView.asp?SelectedTable=13&Freq=Qtr
This tax hike will make the state less attractive
basis. to current and prospective residents.
&FirstYear=1969&LastYear=2010
6 U.S. Census Bureau, “Intercensal Estimates of the Total Resident
Population of States: 1970 to 1980,” U.S. Department of Commerce,
http://www.census.gov/popest/archives/1980s/st7080ts.txt.
Responsible government is possible in Illinois.
7 U.S. Census Bureau, “2010 Census Data,” U.S. Department of
The Illinois budget can be balanced without tax Commerce, http://2010.census.gov/2010census/data.
hike revenue, as demonstrated in the Institute’s 8 Scott Moody, “Leaving Illinois: An Exodus of People and Money,” Il-
“Budget Solutions 2012,” a line-by-line linois Policy Institute, Jan. 12, 2011, http://illinoispolicy.org/news/article.
alternative to the governor’s budget.9 The 2011 asp?ArticleSource=3736.
tax hike should be repealed as soon as possible, 9 “Budget Solutions 2012,” Illinois Policy Institute, March 8, 2011,
http://www.illinoispolicy.org/budgetsolutions2012.
and significant spending reforms should be 10 Illinois Department of Revenue, “Annual Report of Collections and
implemented. Distributions for Fiscal Years 2008 and 2009,” http://tax.illinois.gov/
publications/AnnualReport/Annual-Report-2008-2009.pdf.
The state cannot keep taking money from the 11 Illinois Department of Revenue, “Informational Bulletin: Illinois
Income Tax Increase,” February 2011, http://www.revenue.state.il.us/
pockets of struggling Illinois families. Lowering Publications/Bulletins/2011/FY-2011-09.pdf.
the tax burden will make Illinois a more