When the Illinois General Assembly increased the Illinois income tax Jan. 13 did it think its actions might reduce charitable giving?
Glenview resident Toula Lechman articulated exactly that result along with other changes in her family’s lifestyle Jan. 17 while having lunch at Einstein Bros. Bagels on Waukegan Road.
“This will hurt personal savings as well as discretionary spending,” said Lechman as she described how her family plans to make room in its budget for more taxes. “Charitable giving will be less.”
The new income tax package raises the individual rate from three percent to five percent for the next four years, at which time it will be lowered to a permanent increase of 3.75 percent. This means a family with an income of $50,000 per year will pay an additional $1,000. The corporate tax was also raised from four to 7.9 percent.
Lechman’s opinion was one of a number from a wide range of people in the Village representing business, government and consumers.
Darrell Barber, a financial consultant to the Village, is taking a wait and see attitude about the effect of the tax increase in Glenview.
“I don’t have a crystal ball so I don’t know,” said Barber in reference to the additional taxes. “It’s possible the additional two percent [of income tax] will affect sales tax revenue, but the two percent drop in social security taxes should offset that,” he added referring to recent federal legislation.
State Sen. Garrett (D-Lake Forest), whose district includes much of Glenview, was one of the few Democrats opposing the increase because she felt a closer look at spending was necessary before seeking additional revenue.
“As we ask the taxpayers to dig deeper into their pockets we need to be responsible on how we address out spending,” said Garrett. “I was very upset with the corporate tax being increased because of our proximity to Wisconsin,” she added, not wanting to motivate businesses to move there.
Garrett’s concerns for local commerce were echoed by members of the Glenview commercial community who fear the emerging economic recovery could be affected.
“It’s not going to help any of our businesses," said Glenview Chamber of Commerce President Kathy Miles. “It will hurt business. With the economy starting to come back we don’t know how it will affect traffic in stores.”
Abt Electronics, a Glenview retailer of appliances and electronics employing more than 1,000 people, dealt with a tax increase when Cook County increased its sales tax a few years ago.
“We were impacted by the sales tax increase, but we took measures to offset that impact,” said Abt Sales Manager Marc Cook. “I imagine as tax time approaches people may scale back because of a larger debt, but only time will tell.”
Consumers are not waiting for tax time to make decisions about altering their purchasing habits. Residents like Lechman have already started making changes. Lechman indicated she may start making purchases in Indiana and Wisconsin to save money in places where sales tax is already lower. She was also quick to criticize lawmakers.
“This is terrible; they have no fiscal responsibility,” said Lechman. “What happened to setting a limit on how much you tax without cutting spending?”
Not all residents are totally opposed to the increase, though. Resident Steve Schramm indicated it may have been necessary but felt a 50 percent hike would have been sufficient.
“I’ll have to cut back on buying name brands,” said Schramm Monday outside a Jewel in Glenview. “I’ll be buying more generic brands.”
Others were less generous to the state. “It’s awful,” said Kathy Mulford of Glenview outside the same Jewel. “I’ll be making less big purchases. I may go to Michigan to buy them.”