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.


* HFS to reimburse all Medicaid providers that treat children
* Reader comments closed for the weekend
* Nailed it
* *** UPDATED x1 - Cullerton: "Nope" *** "Sincerely, Bruce"
* The "puppetmaster"
* Question of the day
* A few bits of common sense
* This Just In: Exelon Profits Up 22.2 Percent in 2nd Quarter
* Casino company acquires video gaming operator
* Yes, there are plenty of people to replace Kirk
* Mansion roof to be fixed
* The trend is not our friend
* *** UPDATED x1 - "Willful misreading" *** Duckworth: "I screwed up"
* Rate IllinoisGO's new online ad
* Because... Madigan
* Today's number: 76 percent
* SUBSCRIBERS ONLY - Supplement to today’s edition
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Good morning!
* 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

          
        * Talk Android Weekly Recap: July 24 – August 1, 2015
        * Samsung Galaxy Note 5 and S6 Edge Plus press renders leaked
        * Sony Xperia C5 Ultra and Xperia M5 leaked in full glory
        * Sony to shut down its online store August 28
        * Apple Watch “didn’t reach the break-even volume” that Apple predicted
        * Force Touch iPhone 6s modules reportedly in mass production
        * iPhone sapphire future, New Sony Xperias & more – Pocketnow Daily

        * White Sox resist flailing at deadline
        * LaRoche works scoreless 9th in pitching debut
        * Teixeira's 2 HRs power Yanks past White Sox
        * Rodon finds tough going against Yankees
        * Yankees 13, White Sox 6: Adam LaRoche pitched
        * Danks tries to get White Sox back to winning ways
        * Teixeira's 2 HRs power Yanks past White Sox

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


        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


        * Trooper in Sandra Bland arrest once warned for conduct
        * Take me out to the rooftop: Wrigley changes bring new looks
        * Battery charge against Bills coach Kromer dropped
        * Judge approves place for Mel Reynolds to stay while on bond
        * Geneva man convicted of murdering wife gets 30-year sentence
        * Chicago poised to require breast-feeding rooms at airports
        * 164 skydivers smash head-down world record in Illinois
        * Chicago poised to require breast-feeding rooms at airports
        * Decaying Illinois Executive Mansion to get roof replaced
        * NY village makes ransom payments to keep computers running

        * Executive Mansion to get new roof; fundraising event coming up
        * Blagojevich attorney says he'll ask full court for rehearing
        * Executive Mansion to get roof replaced for $493K
        * Illinois' health insurance co-op among those struggling
        * Court ruling helps some child care providers amid ongoing state budget impasse
        * Rauner, AFSCME reach another contract extension; governor vetoes bill to prohibit strike, lockout
        * Court ruling helps some child care providers
        * Private employers now can give hiring preference to veterans after Rauner signs law
        * Private employers now can give hiring preference to veterans
        * Illinois House votes to reject pay raise; Senate vote expected next week

        * FDA says hospitals should stop using Hospira pump
        * Emanuel sees $426 million hole in 2016 city budget
        * After Gidwitz mess, Rauner sends a message
        * Doctors fight to save Stroger Hospital pediatric unit
        * Chicago mulls borrowing that Puerto Rico rejected as too risky


          * Man charged after stealing suitcase from O'Hare Airport
          * 10 people wounded in separate shootings
          * Man hurt after being stabbed in Palmer Square
          * Man dies after West Pullman shooting
          * Almost 6 acres of land added near Fullerton Avenue Beach
          * Bizarre scene unfolds at cop killing trial as defendant takes stand
          * 3 charged in Elk Grove Village armed robbery
          * Arlington Heights man charged in Glenview rape, robbery
          * Man sues Lolla alcohol vendor, alleged 'zombie' biter
          * House Ethics Committee says Rep. Davis broke no rules in Azerbaijan trip


          * David Gerlach: Lincoln College ready to serve students
          * Charles Krauthammer: Among the ruins, a case of righteousness
          * Executive Mansion to get new roof; fundraising event coming up
          * Blagojevich attorney says he'll ask full court for rehearing
          * E.J. Dionne: The price Boehner pays
          * Charles Steele, Jr.: EPA putting affordable energy in jeopardy
          * Illinois' health insurance co-op among those struggling
          * Catherine Rampell: One job government does better
          * Tom Kiernan: Wind could power Illinois' economic future
          * George Will: With Iran deal, Obama makes bad history


          * Cookoff set in Paxton
          * Wright named city clerk for Villa Grove
          * Best of Illini: No. 8, V'Angelo Bentley
          * Best of teams: No. 8, Notre Dame
          * Governor signs Rose bill on caregivers
          * Schools defunct, but camaraderie isn't
          * 'We've got this disease in our community'
          * Weekend planner: Butterflies at the Virginia
          * Sandra Mason: Q & A in the vegetable garden
          * Who lives here? Aug. 1, 2015


          * The real Matt Foley remembers his friend Chris Farley
          * Legally blind man takes on Naperville triathlon
          * Facebook should scrap its real-name rule
          * IBM, CVS bring Watson to health care
          * Your smartphone could become a tool for medical research

          * House lawmakers overcome hurdle on key tra...
          * Rodney Davis talks funding with Bloomingto...
          * The agency that fought Illiana gets a new ...
          * Rep. Dold takes educational cruise down Ch...
          * Lawmakers decry high turnover rate of VA h...
          * CBD Oil, and politics
          * Simon considering state Senate bid
          * Killer Congressman Tom MacArthur trying to...
          * Shutdown? State may not notice
          * Rep. Bob Dold

          * Durbin says newly passed transportation bi......

          * Top GOP fundraiser questions Illinois sena......

          * Festival Get A+ In Warning Drivers Of Parking Restrictions
          * “The Driver’s Side” – News From The Motorist’s Perspective
          * The Yankees are coming! The Yankees are coming! Does anybody still care?
          * "Body Slam" #RIPRoddyPiper
          * TrackNotes: The Good, Bad, Sad And Suspicious Return Of American Pharoah
          * Chicago Book Haul
          * Huston: Fascist NBC Commentator Says FCC Should Fine Those Who Call 'Transgender' people the Wrong Name
          * Afternoon events from the "In Defense of Life" Seminar in Tinley Park
          * MLB's Next International Market: China
          * The Week In Chicago Rock


          * Governor Announces Appointments
          * Parents Encouraged to Include Emergency Preparedness in Back-to-School Plans - August is School and Campus Preparedness Month in Illinois
          * Governor Takes Bill Action
          * Safety Belt Use in Illinois Reaches 95.2 Percent - Drivers and front seat passengers are buckling up more than ever before in Illinois
          * IDOT Seeks Ownership of Arsenal Road in Will County - Walter Strawn Hearing Request Withdrawn, Work on Long-Term Solutions Continues




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