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Ill. legislative committee OKs smaller tax-break package

An interior look at the dome of the Illinois State Capitol building in Springfield, Ill.
(via Flickr/jglazer75)
An interior look at the dome of the Illinois State Capitol building in Springfield, Ill.

Updated 3:47 p.m.:

A package of tax breaks for Illinois businesses made it through a legislative committee despite major concerns by lawmakers.

The House Revenue Committee approved the measure 6-0 Monday. But two important legislators said they may oppose the bill when it comes up on the House floor.

The package would cost state government about $250 million a year. That's down from $850 million in an earlier proposal.

It would include $85 million in relief for Chicago-based financial exchanges that are threatening to leave the state. It also includes $15 million in tax credits for Sears.

Some lawmakers accused the companies of holding a gun to the state's head.

Gov. Pat Quinn's office said the bill does not offer enough aid to poor and middle class families.

Earlier Story:

Reporting from Illinois Public Radio's Amanda Vinicky used in this report.

A redesigned tax package will have its first public hearing this afternoon. It's designed to keep companies looking to cut costs in Illinois.

After the Chicago Mercantile Exchange and retail giant Sears announced they may move their headquarters from Illinois because other states were offering them deals, state legislators came back with a deal of their own.

But its price tag grew as high as $850 million a year as tax breaks for other businesses and the working poor were looped in.

It was widely seen as too costly, considering Governor Pat Quinn had said Illinois was broke enough that he may have to close state facilities and layoff employees. 

And protestors from the Occupy movement say Illinois has no business giving corporations write-offs when people are struggling.

A scaled back version's pegged to cost about $600 million less.

A change in how the Exchange is taxed is phased in, so it's only a partial hit to state coffers this year.

It still offers an increase in the earned income tax credit, which benefits the working poor.   But whereas the original plan tripled the credit from 5 to 15 percent, this version increases the credit to 7.5 percent.

Many business tax credits are also smaller.

And this version extends for five years untold other tax breaks that would otherwise have expired.

But concerns remain - a school district in the Chicago suburbs near Sears continues to say the plan hurts its students by diverting local taxes.