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.)


TrackBack URI

Sorry, comments for this post are now closed.


* We interrupt this break for a special announcement...
* Reader comments closed for the weekend
* Afternoon updates
* Stop the satellite TV tax!
* *** UPDATED 1x *** Twitter suspends parody account @peoriamayor
* Lesson learned: Don't 'Leave'
* Fitch affirms Illinois GO Bond rating
* BGA: Rauner firm holds state contracts; political round-up
* Question of the Day
* CAPTION CONTEST!
* 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

          
        * Hands On With Facebook Nearby Friends [Video]: No More Checkins
        * In Digital Health, Does Nike Have A Path To Victory After Fuelband?
        * Android Community Weekly Wrap-Up for April 19, 2014
        * Baldur’s Gate Enhanced Edition: first impressions on a revived classic
        * Hands On With Facebook's Nearby Friends
        * Our favourite 5 new Windows Phone apps of the week
        * Nike Layoffs Add Fuel to Apple iWatch Rumors

        * How to Improve Everything You Write in Three Minutes or Less
        * Hang Cups and Use Wire Racks to Maximize Kitchen Cupboard Space
        * First Generation Apple TV Facing Issues When Connecting To iTunes
        * Moto E Specifications Leaked
        * 10 Hidden Features Of Samsung Galaxy S5
        * BlackBerry 10.3 Early Build Shown Off On Video
        * HTC Hires Former Samsung Marketing Guru

        * This Week in White Sox Minor League Baseball
        * Adam Eaton flirts with death, then strains hamstring
        * Prospect Johnson proving 2013 wasn't a fluke
        * Rangers 6, White Sox 3: Rallies stall to extend skid
        * Quintana, White Sox lose touch in rough fourth inning
        * Eaton exits game after collision with Fielder
        * Eaton exits game with mild hamstring strain


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

        Archives
        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


        * District 300 set to pilot new teacher evaluations..
        * Groups sue to stop Illiana Tollway..
        * US Sen. Durbin says he's taking Oberweis seriously..
        * FEMA’s disaster decisions frustrate state, loca.....


        * Former death row inmate details difficulties
        * Police: 6 people injured in Easter party shooting
        * Video gambling exclusion list prompts questions
        * Chicagoan to run 35th straight Boston Marathon
        * Authorities: Newborn baby found in plastic bag
        * Lawyer: No more appeals for Crundwell
        * Downtown Belleville fountain damaged by car crash
        * Chicagoan to run 35th straight Boston Marathon
        * US Sen. Durbin says he's taking Oberweis seriously
        * 5 killed, 22 wounded in Chicago shootings

        * Addiction experts: Illinois budget cuts could hurt drug treatment
        * Comptroller Topinka reports $125K in income
        * Bernard Schoenburg: Durbin, Oberweis spar over earmarks, minimum wage
        * Statehouse Insider: It doesn’t always add up in the General Assembly
        * Chicago casino plan draws more support at legislative hearing
        * Video gaming may get its own exclusion list
        * U of I officials seeking to prevent retirement rush
        * U of I asks state legislators to prevent retirement rush; could affect 200 at UIS
        * 2015 tax rates still far from settled
        * Strip club tax brings in much less than expected

        * Census: People are leaving all six Chicago-area counties
        * Trixie and Chad have kids!
        * Quinn administration funds Diana Rauner's nonprofit
        * Why Lenovo's Moto bid is looking smarter
        * Ignoring Shakespeare's butcher, law firm advises how to cut legal bills


        * Husband, wife — both officers — dead in murder-suicide: police
        * Cardinal celebrates what may be ‘last Easter’ leading Chicago flock
        * Six shot at Easter party in suburban Montgomery
        * Cardinal celebrates what may be ‘last Easter’ Mass as head of Chicago’s flock
        * Rapper Big Glo laid to rest; father vows better life for children
        * 15-year-old held on $950,000 bail in shooting
        * Husband and wife — both law enforcement officers — dead in apparent murder-suicide: police
        * In pre-Easter march, Chicago religion, community activists call for peace
        * Apparent inmate suicide investigated at Lake County Jail
        * City sends bike cops into high-crime neighborhoods


        * 1 dead, 3 others wounded in separate city shootings
        * Man critically injured in crash involving motorcycle, semi
        * Throngs line up for seats at Cardinal's Easter service
        * Geneva woman killed in motorcycle accident in Kane County
        * 6 wounded in shooting at Easter party in Montgomery
        * Police: Husband and wife -- both officers -- dead in murder-suicide
        * Cops: 5 dead, 13 others injured in shootings


        * Illinois Finally Gets 'No Child Left Behind' Waiver
        * U Of I: Illinois Pension Overhaul Had Costly Mistake
        * Fish fry dinners bring food, community to Catholics during Lent
        * Listen To State Week - April 18, 2014
        * Murray Center Advocates Win Appeals Decision
        * Employment Improves, But Illinois Still Lags U.S.
        * Nine Illinois lawmakers vote to fund Obama library - but only five members in attendance
        * WBEZ's Student Stories
        * Interview: John Tinker & The Landmark Case On Students' Right To Free Speech
        * State Legislation Hints At Marijuana Legalization


        * Our Opinion: Don’t drag feet on drone regulation
        * Bernard Schoenburg: Durbin, Oberweis spar over earmarks, minimum wage
        * Bernard Schoenburg: Durbin, Oberweis spar over earmarks, minimum wage
        * Statehouse Insider: It doesn’t always add up in the General Assembly
        * Statehouse Insider: It doesn’t always add up in the General Assembly
        * Armenta L. Johnson: Advocate for quality education to avoid segregation
        * Catherine Walters: Prairie Center Against Sexual Assault notes anniversary, awareness month
        * Video gaming may get its own exclusion list
        * U of I asks state legislators to prevent retirement rush; could affect 200 at UIS
        * Quinn grants 43 clemency requests


        * Cheverlot to host test drive fundraiser
        * Botanical Center plans May, June bus trips
        * Bloomington man dies from kayak accident near Geneva
        * S.I. Women's Connection to host luncheon
        * DeWitt hosts ultimate bachelorette party
        * Pottery presentation at Butterworth
        * Plus 50 Living Fair in Clinton
        * JALC students awarded scholarships
        * Easter Morning "Egg Roll"
        * Relay For Life to host Handbags for Hope


        * The 10th District money race
        * Aurora Democrat calls out IHSA
        * Lawyers: Ill. hazing law vague, unconstitutional
        * Ill. House OKs lower-cost hunting bill for seniors
        * Quinn’s running mate takes new consulting job

        * When Punishment Is Torture: An Open Letter...
        * Jesse Jackson Jr. placed in solitary confi...
        * Jesse Jackson Jr. Transferred To Alabama P...
        * Jesse Jackson Jr. sent to solitary then tr...
        * Jesse Jackson Jr. Maneuvers Himself Into M...
        * Jesse Jackson Jr. Changes Prisons, Could B...
        * Jesse Jackson Jr Moved to Alabama Prison C...
        * Inmates Sent To Solitary Confinement For H...
        * Jesse Jackson Jr. transferred to minimum s...
        * Jesse Jackson Jr. moved to another prison ...

        * Loading Koch Industries Website Too Many T......
        * Maryland and DC among worst for food aller......
        * Cleveland State University to reestablish ......
        * Convicted political boss Al Sanchez runnin......
        * Candidates make last filings for local, st......

        * Illinois Lt. Gov. Simon opposes pension le......
        * Dillard Odd Man Out on Pension Deal Reaction...
        * Sen. Mark Kirk sides with Rauner on pensio......
        * Governor's race infighting threatens pensi......
        * SCHOONERS - Home of Everyone's Favorite Be......

        * Wishing Buehrle back on Sout’ Side
        * Chris Christie’s pension theft in New Jersey. Nation-wide pension theft needs a nation-wide response.
        * GTCR is Rauner’s Bain Capital. So Squeezy gives him a state contract. Shaking up Springfield?
        * Sunday book review section. This is Not a Test.
        * The Library of Congress Pkwy?
        * Sen. Mark Kirk pokes at Eric Holder: Did NSA spy on Congress?
        * Democratic National Committee Executive Committee meeting in Chicago June 8
        * Emily's List hits Chicago June 27: Sebelius, Lisa Madigan, Neely, Finney to speak
        * Feinstein, Chambliss defend phone data snooping to "keep the homeland safe." Durbin has concerns. UPDATED
        * President Obama official schedule and guidance June 6, 2013. North Carolina, California


        * Governor Quinn Announces Investments to Conserve Lake Michigan Shoreline - Visits Volunteer Beach Clean-up to Announce Investments That Will Support Environmental Education and Stewardship Projects
        * Governor Pat Quinn Takes Clemency Action
        * Proposed Rules for Compassionate Use of Medical Cannabis Pilot Program Act Filed
        * Adopt-A-Highway Spring Cleanup Begins Today - Annual Event Honors Earth Day, Tackles Roadside Litter After Harsh Winter
        * Illinois Schools Win No Child Left Behind Waiver - Federal Government Approves Flexibility Needed for Successful Implementation of State Strategies to Improve Student Learning




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