In an attempt to reduce the state of Illinois’ debt, legislators signed a new law increasing the income tax from 3 percent to 5 percent and the corporate tax from 7.3 percent to 9.5 percent.  While increased taxes are projected to raise $6.8 billion annually, the taxes will have an overall negative impact on the economy.

The new income tax is 66 percent higher than the previous income tax.  With the old income tax, those who made $100,000 a year were taxed $3,000, but will now be taxed $5,000.

“We’re saying to the people of Illinois, `For eight years we’ve overspent, now we’re going to make it your problem,'” Republican Illinois State Representative Roger Eddy said in an article in the Huffington Post. “We’re making up for our mistakes on your back.”

The two percent income tax increase will take spending money away from Illinois residents, having a negative impact on the economy.  In order for the economy to grow, money needs to be spent, but unfortunately Illinois residents will have less money to spend.

Some could argue the new income tax is not a large amount of money, but for some people, it could be used more efficiently, such as paying for bills instead of giving it to our state government that has irresponsibly spent our money.

The state will spend $151.6 billion dollars in 2011 alone, according to the United States government spending website.  From a chart provided by the website, it is clear spending has increased by approximately $70 billion annually from 2000 to 2011.

“[Politicians] should be scrutinizing their own expenses a bit.  Certainly there’s some waste in there. Over time taxes are needed, but it seems to me that the taxes are implemented only because of their frivolous spending,” Cindy Klebba, business teacher, said.

The 2.2 percent corporate tax increase will also stunt our economy’s growth.  Corporations whose headquarters are located in Illinois could be compelled to move their companies out of state to avoid the higher taxes.  Jimmy John’s founder is reportedly considering moving the sandwich corporation from Champaign to Florida, according to the Illinois Public Media website.

“Based on this particular legislation, the only businesses that will benefit are the moving companies that will be helping many of my members move out of this particular state,” Gregory Baise, head of the Illinois Manufacturers’ Association said in a January article published in the Huffington Post.

Large companies such as Jimmy John’s could easily handle the increased taxes but should not have to.  They could make more profit in states with lower taxes, therefore bringing in and keeping more revenue.

The newly elected governor of Wisconsin has proposed a tax cut for companies that relocate to Wisconsin from other states, according to Huffington Post.  If companies are forced to pay high taxes in Illinois but are receiving tax breaks in other states, it is unlikely corporations will remain in Illinois.

The higher taxes are only supposed to remain in place for the next four years, however, it is very unlikely the increases will go away anytime soon.  For example, the Illinois toll system was originally implemented for funding to build and maintain highways and was supposed to dissolve once the state was done.  The toll tax never dissolved and is still in place today, 70 years later, at much higher rates than originally established.  The same will happen with the increased tax rates as time goes on.

“Once they start budgeting on an increased budget, increased revenue from increased taxes, how are they going to cut back? Are they going to cut back then?” Klebba said.

With corporations moving out of state and residents being unfairly taxed, Illinois’ economy could be greatly affected.  Residents will not have money to help stimulate the economy and corporations will have relocated to other states potentially costing Illinois residents’ jobs.

The government needs to realize it is unfair to raise taxes and take money out of American’s pockets to solve their problems.  They must find a better way to erase the debt rather than taxing hard working Illinois residents.