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Illinois House approves tax break deal

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SPRINGFIELD — A controversial $350-million tax relief bill targeting businesses and households underwent a transformation, not so much in content, but in style.

By Andrew Thomason

SPRINGFIELD — A controversial $350-million tax relief bill targeting businesses and households underwent a transformation, not so much in content, but in style.

Two bills emerged — one for businesses and the other for households — in the Illinois House and passed with ease Monday.

The combined package failed spectacularly in the House last month by a vote of 8-99.

Splitting the original bill allowed lawmakers to create different coalitions for two distinct issues, said Kent Redfield, a professor of political science at the University of Illinois at Springfield.

"Sometimes you combine things together so people have to take one along with the other, which may have been the strategy the first time around," Redfield said. "But this looks (like) a more productive strategy (when) you separate the issues."

Monday's votes also allowed lawmakers to add a mark in their political record that could help them in the 2012 elections, Redfield said.

The first measure, which passed on a vote of 67-49 with mainly Democratic support, would:

Increase Illinois' Earned Income Tax Credit for low-income households from a maximum of $283 to $566, costing the state $55 million annually.

Raise the standard tax exemption for households from $2,000 to $2,050. This exemption would increase annually based on the rate of inflation. If inflation was flat, no increase would occur that year. The estimated cost is $20 million for the first year and would increase by about $20 million every year thereafter.

The second proposal, which passed on a more bipartisan vote of 81-28, would:

  • Give the CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, an annual tax break of $85 million and retail giant Sears Corp. $150 million in tax breaks over the next decade.
  • Extend research and development tax credits;
  • Reinstate the ability for businesses to claim tax breaks if their incomes don't meet their expenses.

Tweaks include raising the maximum estate tax exemption from its current level of $2 million to $4 million and giving $3.5 million in tax credits for Albion-based Champion Laboratories Inc., a filter supplier, under the piece of legislation addressing businesses.

State Rep. Mike Fortner, R-DeKalb, like many Republicans, voted no to the individual tax relief proposal, but yes to the business relief measure.

"If we're going to do something, I think we have to do something that's a little more meaningful for those in the middle class," Fortner said.

Fortner and many of his GOP colleagues said more needed to be done to walk back the income tax increase that costs the average household in Illinois $975 each year.

"This whole situation was caused by several years, multiple years, of irresponsible budgeting under Democratic leadership, and today we're here to clean up the mess. But we're not cleaning up the mess in a manner that recognizes the full impact of that increase," state Rep. Roger Eddy, R-Hutsonville, said.

The measures also dictate that any revenue coming in fiscal 2012 that is above the money needed for the $33.2 billion budget would pay down the nearly $5 billion in overdue bills payable to businesses the state works with, like hospitals and grocers.

The Senate is returning here Tuesday to take up the two proposals. It approved the original bill that failed in the House.

"These proposals contain important incentives across the economic spectrum. The Senate president is optimistic about their chances of passing the Senate, especially since a similar proposal received strong, bipartisan support just last month," said John Patterson, a spokesman for Senate President John Cullerton, D-Chicago.

Gov. Pat Quinn has said he would sign the tax breaks into law.

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