* Last week’s most interesting reaction to Bruce Rauner’s service tax proposal…
Senate Republican Leader Christine Radogno (R-Lemont):
“The contrast in this election has never been more clear. Bruce Rauner wants to lower your income taxes while Pat Quinn wants to raise them 67%. Bruce Rauner wants to freeze your property taxes while Pat Quinn lets them rise. There’s only one candidate who has a vision to create jobs and turn Illinois into a growth economy, and that’s Bruce Rauner.”
House Republican Leader Jim Durkin (R-Western Springs):
“Middle-class families across Illinois are struggling under the Quinn-Madigan policies of higher income taxes, higher property taxes, and burdensome regulations. Bruce Rauner’s plan offers the citizens of Illinois a new direction of lower taxes, high-paying jobs and real opportunities for growth.”
That’s the first time those two have supported a tax hike since the little-remembered candy tax, which funded part of the 2009 capital bill.
And they didn’t just support a service tax. As Rauner has said, he wants to step down the 5 percent income tax to 3 percent in four years.
And as we’ve discussed before, the problem is that the tax hike is scheduled to roll back to 3.75 percent on January 1st - before he’s inaugurated (assuming he is, that is). So, to avoid the huge fiscal cliff created by the current state budget, those tax rates are gonna have to go up. Maybe not all the way up to 5 percent, but up, nonetheless.
It’s tough to implement something as big as a new service tax right away. It takes time to ramp up to that sort of thing. Income taxes are a different matter. Businesses already have the software and personnel in place to handle changes to that rate. Service companies have never paid sales tax, though, so that couldn’t be imposed immediately. So, you can’t count on a service tax to replace any income tax revenue during the final six months of the current fiscal year.
* Rauner made it pretty clear yesterday that rates will have to go up after he’s inaugurated. Our commenter 47th Ward showed once again the other day why he won the Golden Horseshoe award last year...
Has he told Durkin and Radogno yet? Because he’s going to need an awful lot of GOP votes to raise the income tax back up to 5%.
* I expect that the Democrats will cooperate with Rauner if he’s elected, but only so far. After years of going it alone, they’re gonna want a substantial number of Republican votes on any tax bill.
And after complaining bitterly about the tax hike for years and basing their members’ campaigns on opposition to the 5 percent rate, and with their caucuses full of people who’ve been able to avoid hard votes on actual governance, the two GOP legislative leaders are now in quite an interesting little box here.
* Meanwhile, Rep. David Harris (R-Arlington Heights) sent out a helpful press release yesterday…
State Representative David Harris (R-Arlington Heights) today introduced House Bill 6289. HB 6289 makes two key changes related to state revenue and fees.
First, the bill includes corporate income generated in the outer continental shelf. This income is currently excluded from corporate income, and this exclusion is often called the “Big Oil Loophole.” Governor Quinn proposed making this change back in the 2013 legislative session, and GOP gubernatorial candidate Bruce Rauner has made it part of his campaign’s “Corporate Welfare Reform” agenda.
The second key change in the bill is to reduce the filing fee for a new Limited Liability Company (LLC) to $75 from the current $500 fee, which is the highest in the nation. HB 6289 also reduces the fee for a series LLC to $125 from the current $750. Governor Quinn made reducing the LLC fee part of his 2014 Budget Message, and Mr. Rauner called for reduction of the LLC fees in his campaign’s “Jobs and Growth” agenda.
“The State of Illinois has serious financial problems facing it, and it needs to encourage job growth within our State,” said Harris. “HB 6289 raises revenue by closing what many perceive to be a tax loophole, and it significantly lessens the financial burden that companies bear in starting a company in our State.
“Even though the legislature is currently out of session, I hope that the two gubernatorial candidates can agree that HB 6289 moves our State’s tax and fee policies in the right direction and that each of them can support HB 6289 or a similar bill in the 2015 session no matter who wins in November.”
Good idea by Harris.