Ill. residents react to massive tax hike

January 12, 2011 (CHICAGO) (WLS) -- The income tax increase in Illinois is retroactive to January 1. But taxpayers won't see a change in their paychecks until the end of the month.

The new state income tax increases taxes from 3 to 5 percent.

For those with an annual income of $35,000, the taxes go from $1,050 to $1,750. For those earning $75,000 a year, the taxes were $2,250 and will be $3,750. And for a $250,000 yearly income, the taxes went from $7,500 to $12,500.

These increases will negate what many Illinois taxpayers would have gotten back from Washington with the federal deal the president and Congress recently made to extend the Bush-era tax cuts.

Still, state residents and businesses will pay more -- and that's got some riled up while others are saying thank goodness.

Maria Whelan has been running Illinois Action for Children for the better part of her adult life. The former political staffer and fierce advocate for social services for families says the governor's tax hike is manna from heaven.

"I pity women trying to work and afford child care because these services were about to go away," said Whelan.

At a Chicagoland Chamber of Commerce networking event Wednesday evening, paying bills was seen as reasonable -- sort of.

"Those bills have been long past due at this point. But for us to start picking up the bill, that is a concern for me," said John Rico, Rico Enterprises.

"I am not in business for the fun of it. I am in business to make money, be successful, create new jobs and grow my business," said Brian Leonard, Code Red.

Neighboring states say the Illinois tax hike is a job killer. .

"That's exactly where they're taking it in that direction right now in the Land of Lincoln. We want to send a sharp contrast. Wisconsin is open for business," said Gov. Scott Walker of Wisconsin.

"At the end of the day, when it is a sacrifice that lifts up real people and real communities in this state it is a sacrifice that almost everyone is willing to make. And frankly, shame on those who are not," said Whelan.

Some advocates of the tax increase go so far as to say it's stimulating to the economy. Because it is a flat tax, they say, those at the bottom of the income scale will spend more of their disposable income on it, putting that money back in the economy.

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