The state of Illinois has passed measures to raise the personal income tax rate by 67 percent and business income tax rate by 46 percent in order to get a handle on the state’s huge budget deficit.

Many states around the country are facing similar financial woes, especially areas that have been damaged by high unemployment and the housing collapse.

Specifically, in Illinois, the personal income tax rate will climb to 5 percent from 3 percent while corporate tax rates will go up to 7 percent from 4.8 percent.

State senators in the capitol Springfield voted 30-29 on the tax hikes – but not a single member of the Republican Party approved the bill.

Republicans said the massive tax increases will drive businesses out of the state, whilst Democrats said it was necessary to tackle the state’s deficit.

Illinois is in crisis, absolute financial crisis, and there is no way we can dig ourselves out of the crisis without increased revenues, said House Majority Leader Barbara Flynn Currie, a Democrat. There is no way, no way, we can cut our way out of the deficit we face.

The state of Illinois, battered by the recession, is estimated to be burdened by a $15-billion budget deficit, including $6 billion in unpaid bills and a drastically underfunded state pension plan.

We have just come through the worst economic crisis in our lifetime...and we have not paid our bills, said Democratic Senate President John Cullerton. We are going to have to cut...even with this tax. We're going to have to spend less money then we have in the last two years. And it's going to be tough. But we are going to have our bills paid.

Also, the bill seeks to control spending in each of the next four budget years -- $36.8 billion in the 2012 budget year, $37.5 billion in 2013, $38.3 billion in 2014 and $39 billion in 2015.

Republicans unanimously opposed the tax hikes.

Republican state Senator Kyle McCarter quipped: Here's an investment tip, put a lot of money into moving vans.

Similarly, another GOP member of the state body, Matt Murphy, warned you may think your stabilizing this budget but you're not. You're bankrupting our state with this bill.

The tax increases, which are expected to raise an estimated $6.5-billion over a full year, will take effect retroactively to January 1.

However, the tax hikes are only temporary – the income tax rate would decline to 3.75 percent in 2015, then fall further to 3.25 percent in 2025. The corporate tax rate would fall to 5.25 percent in 2015, then drop to 4.8 percent (the current rate) in 2025.

Governor Pat Quinn is a strong supporter of the tax hikes, explaining that Our fiscal house was burning.