SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Unclear on the concept

Friday, Feb 14, 2014

* Rep. Mike Smiddy (D-Hillsdale) supports raising the minimum wage to $10 an hour and talked a bit about the impact on small business

Smiddy said he agrees that more of the tax burden should be shifted from small businesses to large corporations. He believes that loopholes would be closed by shifting away from what he calls an antiquated tax system based on property.

“Illinois is one of only 7 states that still have a flat-tax system,” Smiddy said. “We need to move to a graduated-tax system.”

* OK, this is a bit off on at least a couple of levels.

1) Big corporations don’t pay a whole lot of corporate income taxes. But unless they’re in a TIF district, some of the only taxes that big corporations pay are property taxes. Shift property taxes to the income tax and corporations won’t be paying much of anything. Unless something else is done, the burden will be shifted to individuals and small businesses.

2) Except for the 2.5 percent Personal Property Replacement Tax, most small businesses don’t pay the corporate income tax at all, but they do pay personal income taxes. Increasing tax rates on higher earners will most definitely impact small business owners.

You want to help out small business in exchange for raising the minimum wage? Well, one option would be to lower or eliminate the PPRT, or do something more about workers’ comp and unemployment insurance costs.

- Posted by Rich Miller        


14 Comments
  1. - Empty Suit - Friday, Feb 14, 14 @ 10:40 am:

    The news reports sounded like he got a lot of push back at his town hall. Oops


  2. - Formerly Known As... - Friday, Feb 14, 14 @ 10:40 am:

    These piecemeal proposals are often heavy on partisanship but light on offering a cohesive plan. Good points, Rich.


  3. - Norseman - Friday, Feb 14, 14 @ 10:44 am:

    Uh oh! Someone let Rep. Smiddy talk without getting staff approval.


  4. - CicrcularFiringSquad - Friday, Feb 14, 14 @ 10:50 am:

    Biz pays little or nothing.
    They were the big winners with BLinkyJim Edgar and the GOPies pushed through real estate tax caps.
    The reformers all claimed this would help homeowners, but biz waz the big winner


  5. - Downstate Illinois - Friday, Feb 14, 14 @ 10:53 am:

    Rich, you’re mistaken about TIFs. Even if a corporation is in a TIF district they will pay the full amount of property taxes that are owed on the property. TIF districts don’t reduce the property tax on anybody, they just divert the portion of property taxes that were caused by the increase in property values from the development. That tax increment usually goes to the developer and is split with the city.


  6. - Anon - Friday, Feb 14, 14 @ 11:15 am:

    “some of the only taxes that big corporations pay are property taxes. ”

    What about payroll tax? Licenses? Fees? Telcomm tax? Tolls? Sales tax? Fuel tax? Employment security tax? Franchise tax?


  7. - Rich Miller - Friday, Feb 14, 14 @ 11:17 am:

    Anon, I didn’t say they didn’t pay any other taxes at all.


  8. - Rich Miller - Friday, Feb 14, 14 @ 11:25 am:

    Downstate Illinois, while admittedly an inartful statement of mine, what I meant is that the companies get some of that tax money back through direct investment in the district.


  9. - Living in Machiaville - Friday, Feb 14, 14 @ 11:26 am:

    Dang Rich, could not have put it any better than you did if I tried.

    Circular, you may not have underestood Rich’s point about taxes. Please do not lump small business in with big ‘biz’. The vast majority of Illinois business (90% plus) have less than 20 employees and don’t organize as C corps and get those tax benefits.


  10. - Yellow Dog Democrat - Friday, Feb 14, 14 @ 11:27 am:

    Rich -

    Agree with you on a few levels. First, an unbiased snapshot of the business tax climate in Illinois from the nonpartisan Tax Foundation:

    Business Tax Climate for Illinois (1=Best, 50 = worst):

    Overall: 31
    Corporate Tax Rate: 47
    Individual Income Tax: 11
    Sales Tax: 33
    Unemployment Insurance: 43
    Property Tax: 44

    Rich has a point that some businesses pay a lot of property taxes, but honestly how much real estate does it take to run a dot.com?

    Most of the inequity in property taxes is driven by the inequity in the school funding formula, which a graduated income tax system would likely address, and the “unique” Cook County property tax system which shifts the tax burden from individuals to businesses — which most reasonable people agree probably ought to change and nearly everyone agrees isn’t going to change any time soon.

    On the unemployment insurance tax rank, Illinois could review the rankings to ensure they are actuarially sound, but since the primary driver of insurance rates is wages, and Illinois happens to be a high-wage state, I wouldn’t read to much into it.

    A few final points:

    Business tax climate is only one of the data points businesses examine, and while one of the easiest to quantify and measure across localities, it is certainly not the most important factor.

    California is ranked 48th worst for its tax climate, but last time I checked, Silicon Valley was still in California and analysts said California was running strong, despite the worst drought in a century.

    New York is ranked 50th. Last time I checked, New York was home to Wall Street and more Fortune 500 companies than any other state.

    So, take these rankings with a grain of salt. And two shots of tequila.


  11. - PoolGuy - Friday, Feb 14, 14 @ 11:44 am:

    I think most small businesses pay 1.5% PPRT and corporations pay 2.5%. but either way i wish we could get rid of PPRT and just have one rate. and if they ever pass a graduated tax then drop the PPRT for small businesses altogether. if most corporations don’t even pay corp tax then this talk of lowering it looks like such a snub to small biz when talk of graduated tax at same time.


  12. - Cook County Commoner - Friday, Feb 14, 14 @ 12:12 pm:

    Regardless of how taxes are apportioned between “big” and “small” businesses, businesses remain tax collectors. The tax load falls onto the end purchaser of a business’s product or service, subject to competitive forces controlling how much of the load a business can pass along to its customers. And if the business cannot successfully pass on the load relative to its competitors and maintain a competitive price, it folds. Seems when folks talk about taxes on businesses, they neglect to consider how business operates.


  13. - A guy... - Friday, Feb 14, 14 @ 1:04 pm:

    This goofy statement from Smiddy begs that one of two things happen; fire a staffer for a dopey position paper. Get a staffer, because the dopey position was arrived at on his own.


  14. - Just the Facts - Friday, Feb 14, 14 @ 1:45 pm:

    The problem with reducing or eliminating the PPRT is that the tax receipts go to units of local government. For example, according the Department of Revenue, Springfield School District 186 received $3,682,000 for the most recent year. If you eliminate that revenue stream to the locals, they will have to replace it and more many of the local governmental units the only option would be to raise property taxes.

    There may also be a constitutional issue with eliminating the PPRT as well. The PPRT was enacted in 1979 because the Illinois constitution of 1970 mandated the elimination of personal property taxes and charged the General Assembly with coming up with a replacement for the revenues. (See Article IX, Section 5(c) of the Constitution.)


Sorry, comments for this post are now closed.


* When Indiana invaded Illinois
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............

...............


Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

          
        * Rumour: HTC’s new flagship will allegedly feature ground-breaking camera technology
        * Oukitel K10000 images leaked, brace yourself for its 10,000 mAh battery
        * Android Lollipop (Preview) now available for Huwaei Ascend Mate 2
        * Sprint will open 20 new US stores in partnership with Europe’s Dixons Carphone
        * iOS 8.4 removed iTunes Home Sharing support
        * Users say Google capping “unlimited” uploads in Photos storage [UPDATE]
        * Moto 360 sees hefty price drops at multiple retailers as new model approaches

        * Microsoft Agrees That Xbox One Needs To Perform Better In Europe
        * OnePlus 2 With 4GB Of RAM Spotted In Benchmarks
        * Sharkoon Shark Zone M51+ Gaming Mouse Bundle Introduced
        * How Facebook Plans to Take On YouTube
        * Plex Hacked, Change Your Password Now
        * FlyInside FSX Oculus Rift Software For Flight Simulator X (video)
        * Nexus 6 Price Dropped To £304 In The UK

        * Who will finish second in homers for the 2015 White Sox?
        * White Sox not deterred by delays, top Cards
        * White Sox shows signs in two wins vs. Cards
        * White Sox show signs in two wins vs. Cards
        * White Sox 7, Cardinals 1: Living after midnight
        * Danks draws O's Ubaldo in Chicago opener
        * White Sox not deterred by delays, top Cards

        ...............


        Main Menu
        Home
        Illinois
        YouTube
        Pundit rankings
        Obama
        Subscriber Content
        Durbin
        Burris
        Blagojevich Trial
        Advertising
        Updated Posts
        Polls

        Archives
        July 2015
        June 2015
        May 2015
        April 2015
        March 2015
        February 2015
        January 2015
        December 2014
        November 2014
        October 2014
        September 2014
        August 2014
        July 2014
        June 2014
        May 2014
        April 2014
        March 2014
        February 2014
        January 2014
        December 2013
        November 2013
        October 2013
        September 2013
        August 2013
        July 2013
        June 2013
        May 2013
        April 2013
        March 2013
        February 2013
        January 2013
        December 2012
        November 2012
        October 2012
        September 2012
        August 2012
        July 2012
        June 2012
        May 2012
        April 2012
        March 2012
        February 2012
        January 2012
        December 2011
        November 2011
        October 2011
        September 2011
        August 2011
        July 2011
        June 2011
        May 2011
        April 2011
        March 2011
        February 2011
        January 2011
        December 2010
        November 2010
        October 2010
        September 2010
        August 2010
        July 2010
        June 2010
        May 2010
        April 2010
        March 2010
        February 2010
        January 2010
        December 2009
        November 2009
        October 2009
        September 2009
        August 2009
        July 2009
        June 2009
        May 2009
        April 2009
        March 2009
        February 2009
        January 2009
        December 2008
        November 2008
        October 2008
        September 2008
        August 2008
        July 2008
        June 2008
        May 2008
        April 2008
        March 2008
        February 2008
        January 2008
        December 2007
        November 2007
        October 2007
        September 2007
        August 2007
        July 2007
        June 2007
        May 2007
        April 2007
        March 2007
        February 2007
        January 2007
        December 2006
        November 2006
        October 2006
        September 2006
        August 2006
        July 2006
        June 2006
        May 2006
        April 2006
        March 2006
        February 2006
        January 2006
        December 2005
        April 2005
        March 2005
        February 2005
        January 2005
        December 2004
        November 2004
        October 2004

        Blog*Spot Archives
        November 2005
        October 2005
        September 2005
        August 2005
        July 2005
        June 2005
        May 2005

        Syndication

        RSS Feed 2.0
        Comments RSS 2.0
        WordPress

        Loading


        * Lawmakers Fail To Pass Temporary Budget; State .....
        * Tornado-Affected Residents Get Extra Time For T.....
        * Grassroots Efforts To Keep State Museum Open - .....
        * Dawn Patrol: Who's getting paid in state shutdo.....
        * Day two of FY 2016 and no budget; One month bud.....
        * Residents hit by tornado get more time to file .....


        * Indiana law spurs 'fireworks tourism' from Illinoisans
        * Champaign man who admitted killing U of I student sentenced
        * Mayor: Chicago school cuts include layoffs, less maintenance
        * Illinois House defeats 1-month budget, battle continues
        * 2 red panda cubs born at Chicago's Lincoln Park Zoo
        * U of Illinois president puts raise talk off over budget
        * Emanuel won't detail what he knew on Clinton emails
        * Ex-Illinois women's basketball players sue school, coach
        * Illinois rainfall of 9.53 inches set June record
        * Property tax freeze, Chicago pension relief advance

        * State lawmakers point fingers over budget impasse; temporary budget in limbo
        * Former Illinois treasurer employees under Dan Rutherford sue over firings
        * Lawmakers point fingers over budget impasse; temporary budget in limbo
        * Illinois medical marijuana patients now number 2,600
        * Budget impasse shuts down Lincoln's Challenge program for troubled youths
        * Illinois House defeats 1-month budget; same bill coming from Senate
        * Rauner vetoes pay raises for state lawmakers
        * Illinois Senate advances plan to increase school funding
        * Illinois Senate committee advances plan to increase school funding
        * Democrats push 1-month budget; Rauner, GOP likely to oppose

        * 8 random questions for the CEO of Inventables
        * How many boutique cycling studios does Chicago need?
        * Roughing it in comfort down on the farm
        * Bluegrass at the Opera House, an Indendence Day Salute in the park
        * Here's why Prince Charles is impressed by this 22-year-old entrepreneur


          * Paralyzed cop says he's being evicted because city failed to pay bills
          * Chicago extends taxing power to online movies, music, more
          * Man who admitted killing U. of I. student from Chicago sentenced
          * Police investigate shooting on Eisenhower Expressway
          * Man accused of strangling woman in Lawndale
          * Boy playing basketball hurt when SUV drives onto court
          * 1 killed, 5 wounded in shootings
          * Carnival worker charged in underage sex case
          * Former Illinois treasurer employees sue over firings
          * Alleged 'squatters' get boot, charges filed


          * After pension payment, Chicago Public Schools to make $200M in cuts
          * CPS, Emanuel warn of deep cuts, layoffs to school district
          * After marriage equality, what's next for the LGBT movement?
          * The night Chicago politicians spent punching each other in the face
          * The legacy of Willie Dixon on his 100th birthday
          * Supreme Court rules all states must license and recognize same-sex marriages
          * Preckwinkle may reevaluate sales tax plan if Springfield acts on pensions
          * Democratic lawmaker 'mad as hell' over Rauner's veto of state budget
          * At eleventh hour, CPS makes huge pension payment
          * Contract talks break down between Chicago teachers and city


          * Bernard Schoenburg: Gov. Rauner's tone has changed, Sen. Andy Manar says
          * Our Opinion: Winslow looks to heal divisions in Springfield
          * George Will: Some GOP candidates becoming unhinged
          * Eugene Robinson: In Charleston, 'the power of God's grace'
          * State lawmakers point fingers over budget impasse; temporary budget in limbo
          * Former Illinois treasurer employees under Dan Rutherford sue over firings
          * Illinois medical marijuana patients now number 2,600
          * Budget impasse shuts down Lincoln's Challenge program for troubled youths
          * Rauner vetoes pay raises for state lawmakers
          * Illinois Senate advances plan to increase school funding


          * A sight to behold
          * Entertainment listings, July 2-9, 2015
          * Notes-Worthy: Michael Guido Esteves and Boom-Jam
          * Rich Warren: Unlocking smartphone prices
          * Chuck Koplinski: No shortage of ideas in 'Terminator Genisys'
          * Clubs listings, July 2-9, 2015
          * Frank's Faves:Star-spangled movies
          * Area Calendar 7/2/15
          * Bikers on cross-country ride aid Habitat builders
          * Agencies reduce staff, services to families amid budget impasse


          * Meet the couple that fell in love at historic Wadsworth feed mill
          * When Gary Avenue road construction could be done
          * Barrington White House ready for village's 150th 4th of July
          * Mount Prospect chief drops controversial immigrant hiring proposal
          * Dawn Patrol: Who's getting paid in state shutdown? July 4 festivities begin

          * “The Driver’s Side” – News From The Motorist’s Perspective
          * End Of An Era: City Sticker Lines Evaporate A Year After Start Of Year Round Sales
          * Having to flee one’s home ought to be a disgrace on an Independence Day
          * Friday City Trash Pick-Up Is On Thursday This Week
          * Chicago's Archbishop Comments On Supreme Court Decisions
          * Cantina De La Granja Slated For Late July Opening
          * Emanuel Provides Details On CPS Cuts, Possible Property Tax Hike
          * "Dispensary 33" Coming Soon to 5001 N. Clark
          * Durbin celebrates at Gay Pride Parade 2015
          * Illinois Senate Passes Temporary Budget


          * State, Teamsters Reach Tentative Agreement - Workers at IDOT, DHS, IDES, and CMS in Cook County to Vote on New Contract
          * Governor Rauner Extends Tax Filing and Payment Deadlines for Businesses and Individuals Impacted by Recent Tornado - Deadlines Pushed to December 31, 2015
          * Illinois EPA Releases Annual Report on Landfill Capacity
          * IDNR Urges Public to Leave Fireworks Displays to Those Who Are Licensed and Trained - Fireworks Show Sponsors Reminded to Check Credentials of Fireworks Vendors
          * Governor Receives Initial Criminal Justice Commission Report

              * Durbin Statement On Opening Of Embassies W......
              * Senator slams for-profit college for 'dece......

              * Kirk supports Granite City stroke survivor......




              Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller