by Calculated Risk on 1/12/2011 11:19:00 AM

From the WSJ: Illinois House Passes Big Income-Tax Increase

Among the increases in the bill, the individual income-tax rate would jump to 5%, from 3%. ... The corporation tax would also rise to 7% from 4.8%.

It sounds like this will pass in the Illinois state senate and be signed into law.

This is a key theme for 2011: State and local spending cuts and tax hikes. Question #7 for 2011: State and Local Governments. This will be a drag on growth and employment as the states try to get their fiscal houses in order.

Also Meredith Whitney was on CNBC: Whitney Defends Muni Call, Sees 'Indiscriminate Selling'. Her key call was not the number of muni defaults, but the size of the defaults. On 60 Minutes Whitney said about this year: "You could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults." As I noted in the State and Local government post, I think that level of defaults is unlikely.