Illinois
Illinois again considers taxing drivers per mile
There’s another push in Springfield to tax motorists by the mile. Illinoisans already pay the second-highest gas taxes in the nation behind only California.
Illinois state lawmakers again want to tax drivers on each mile of road they use – an idea that lasted a week the last time they raised the idea.
With electric cars and cars being more fuel efficient, Illinois is not seeing as much revenue per vehicle, so state lawmakers are considering a vehicle miles traveled tax to raise more money from motorists. State Sen. Ram Villivalam, D-Chicago, proposed legislation exploring a “road usage charge” to tax drivers by the mile.
The tax might involve transponders, meaning the taxman would be tracking a driver’s movement. Or a photo of the odometer could be sent. Both gas and electric vehicles would be part of a 1,000-vehicle test of drivers who volunteer to be taxed based on miles driven, and possibly on the time of day they use roads. The move would target Illinois drivers who don’t pay the gas tax by driving electric cars or use less gas because their vehicles are efficient.
Proponents say electric vehicle drivers should contribute more than they are to funding roads. Electric vehicle license plate renewals are $251 compared to $151 for a gas vehicle. The pilot program would incentivize EV drivers to join with a discount on annual registration.
Since Gov. J.B. Pritzker doubled the gas tax in 2019 and built in automatic annual increases so lawmakers would no longer vote on the unpopular taxes, the amount drivers pay in gas taxes has reached roughly $2 billion. Illinois drivers pay the second-highest gas taxes in the nation, behind only California.
Illinois last discussed a VMT tax in 2019, but the bill’s sponsor drew so much ire that he pulled the bill a week later.
This effort, Senate Bill 1938, was being co-sponsored by state Sen. Christopher Belt, D-East St. Louis, but he pulled his name off the bill. It is assigned to the Transportation Committee, where it must receive a passing vote by March 21.
It’s hard to believe Illinois would ever be strapped for infrastructure cash. The state is going to spend $40 billion on roads, bridges and other infrastructure projects during a six-year span.
Another broken promise would be easier to believe. Illinoisans were once promised “Toll free in ’73,” meaning toll roads would eventually cost drivers nothing, but that never happened.
The new initiative invites young, up-and-coming directors,…
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Combined state and federal taxes would take more than 50% of the top-end income for 22,000 Illinois small businesses.
Proposals in the Illinois General Assembly could slam massive tax hikes onto small businesses, the state’s primary job creator historically and in the recovery from the COVID-19 downturn.
One measure would punish 22,020 Illinois small businesses with a huge increase in their marginal state income tax rate and create a top tax rate of nearly 50.3% for them, once all state and federal income taxes are factored in.
S-corporations and partnerships, which “pass-through” their business income to their owners, who pay taxes as individuals, would see their top marginal state income tax rate jump from 4.95% to 7.95%, a 61% hike.
That would happen because the legislation, House Joint Resolution Constitutional Amendment 21, adds a 3% income tax on income above $1 million. It is scheduled for a hearing April 23 at which it could pass out of committee and go to a potential full House vote.
Research has shown that an increase in the top marginal tax rate is associated with a decrease in entrepreneurs’ hiring activity and lower wages for their employees.
Illinois has one of the highest unemployment rates in the nation and among the slowest wage growth. These are exacerbated by some of the highest state and local tax burdens in the nation, including the second-highest property taxes and eighth-highest sales taxes.
In 2017 Illinois residents endured the largest permanent income tax hike in state history, when lawmakers increased the rate by 32%, from 3.75% to 4.95%.
Illinois already pushes out more businesses than virtually any other state. The “millionaire’s tax” could make the situation even worse. Illinoisans should reject this call for higher taxes on the state’s vital small business community.
Contact your state representative to stop the small business tax hike here.
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