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Rauner calls for lower Illinois income tax, new tax on services; Quinn says it's 'a dumb idea'

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SCHAUMBURG, Illinois — Republican gubernatorial candidate Bruce Rauner said Thursday he wants to lower Illinois' income tax rate, freeze property taxes and impose a new sales tax on some services, a plan he said would help improve the economy and grow jobs but that Gov. Pat Quinn dismissed as "a dumb idea."

Rauner unveiled his plan at a family-owned manufacturing plant in Schaumburg, where he said Quinn's policies — including his support for raising the income tax — have created a hostile business climate and caused people to flee the state.

"His track record is atrocious," the businessman from Winnetka said.

Quinn countered that he helped lead Illinois out of a recession and said Rauner's plan to tax services such as trash collection and interior decorating would hurt "everyday people."

"This is a dumb idea and I don't believe people in Illinois are going to buy it whatsoever," the Chicago Democrat said following a stop at a Chicago technical school, where he announced he was expanding a training program for construction jobs.

Quinn also touted Thursday's announcement that Illinois' unemployment dropped to 7.1 percent in June — the lowest it's been since October 2008. The Illinois rate in June was still higher than the national level of 6.1 percent.

But Rauner's campaign was unimpressed.

"We need to do better," Spokesman Mike Schrimpf said.

Quinn and other Democrats increased Illinois' income tax rate from 3 percent to 5 percent for individuals in 2011. It's set to drop to 3.75 percent on Jan. 1, though Quinn and Democratic leaders want to make the 5 percent rate permanent in order to avoid a multibillion-dollar budget hole and cuts to education, social services and other areas.

Rauner wants to roll the rate back to 3 percent over four years. He also said he'd seek legislation to freeze the property tax and require any new property tax hikes to be approved by voters.

Rauner says the new 5 percent tax on services would focus on "luxury" items, such as charter flights and golf club memberships. But his plan also included other, more typically used services such as sewer service and mini-storage. He says "day-to-day" services such as laundromats and day cares would be exempted. Altogether, he projected the new taxes would bring in about $600 million per year.

His campaign also raised an eyebrow at Quinn's criticism, saying the governor testified in favor of a 2009 budget proposal that included a tax on services, including dry cleaning. But Quinn spokeswoman Brooke Anderson said that testimony was part of budget negotiations. The governor only favored part of the proposal, and not the tax on services, she said.

Rauner's plan also includes reforming worker's compensation so premiums are more in line with other states, expanding career and technical education and investing in research institutions.

He said he is open to raising the minimum wage over time to $10 per hour if it is tied to those business reforms, so small businesses are able to afford the added labor costs. That position is a change from early in the Republican primary, when Rauner said he would support lowering the minimum wage. He later said he had made a mistake and didn't want to do so.

Quinn supports raising the minimum wage to $10 per hour, and is pushing for lawmakers to do so by the end of the year.

Rauner on Thursday also picked up the endorsement of the Illinois Manufacturers' Association, which represents about 4,000 companies and facilities. The organization's president and CEO, Greg Baise, said Illinois has lost thousands of manufacturing jobs in recent years. He praised Rauner's plan to broaden the tax base and reduce the cost of worker's compensation premiums.

"We cannot afford a hostile business climate coupled with a tax and spend policy that crushes investment across our state," Baise said.

Rauner's economic plan also includes making a tax credit permanent for manufacturers. Currently lawmakers must reauthorize the credit every five years.

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Lester reported from Chicago.

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Follow Sara Burnett at https://twitter.com/sara_burnett.

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