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* More potentially bad news…
On Thursday, it was the Chicago Board Options Exchange suggesting that higher corporate taxes in Illinois could cause it to take jobs out of state. The CBOE’s warning came a day after CME Group Inc. said the same thing. CME owns the Chicago Mercantile Exchange and the Chicago Board of Trade.
* And some good news for a change. From a Gov. Pat Quinn press release…
“Today’s announcement that United Airlines is bringing 1,300 jobs to Chicago is great news.
“The merger of United and Continental Airlines and their plan to continue making Chicago the nation’s hub for air transportation show that our efforts to boost Illinois’ businesses are paying off. This investment will have a major impact on our state as the company grows and its employees become part of our economic fabric.
“This once again demonstrates that Illinois is the premier state in the Midwest for businesses from around the world, and we’re committed to continuing to make it an even better place to live and work. I thank United Airlines for its continued commitment to the state of Illinois and the city of Chicago as we continue our economic recovery.”
…Adding… From Mayor Emanuel’s press office…
Mayor Emanuel made the announcement alongside United Airlines president and CEO Jeff Smisek, on the 10th floor of the Willis Tower, where many of the United Airlines employees will be working.
“As Chicago’s hometown airline, United is pleased to announce that we are bringing an additional 1,300 jobs downtown from locations throughout our system by the end of 2012,” said Smisek. “Mayor Emanuel recognizes the importance of keeping Chicago competitive with other cities and expanding job growth here, and we look forward to working together with him and his team.”
* The Question: Should Illinois’ corporate income tax hike be repealed - after finding a way to replace the revenue or cut the budget? Take the poll and then explain your answer in comments, please.
posted by Rich Miller
Friday, Jun 10, 11 @ 12:23 pm
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Any cuts in the corporate rate should be tied to an income tax cut.
Comment by Pink Girl Friday, Jun 10, 11 @ 12:34 pm
Yes. We have plenty of questionable boards making around 100k each member to do things that could be administrated in much more efficient ways. We have overpaid legislators, we have more layers of government than any other state (apparently). Every dollar of payroll we cut actually saves us $1.2 or so after payroll taxes, and that’s not even adding in saving benefit and pension costs. We need to slim down.
Combine that with the fact that the increased taxes DO place added strain on companies in a time when we really don’t want to be adding pressure to them. Like it or not, we ARE competing with other states. I don’t have all the magic bullets of where to cut, probably because there aren’t any. But putting are combined tax rates up near the top of the country is not part future-thinking plan. Are problem is that for far too long we have grabbed anything we can to help the now, and make the later more and more dismal.
Then, when the later becomes the now, we shake our heads at how terrible the people before us ran everything, and grab all we can right now all over again.
Comment by Liandro Friday, Jun 10, 11 @ 12:36 pm
When you add the line - “after finding a way to replace the revenue or cut the budget” it should be a no brainer to repeal the tax hike.
Comment by Homer J. Simpson Friday, Jun 10, 11 @ 12:37 pm
I am fed up with these CEO’s always looking for a handout. If Illinois companies can afford to pay their chiefs millions of dollars every year and fly them around in corporate jets to resorts throughout the hemisphere (see recent Crain’s story on this), they should be able to afford their fair share of taxes.
Should school kids be in even more crowded classrooms and the disabled be denied needed services just so the business bigwigs can line their pockets a little more.
These guys are extortionists!
Comment by Truthteller Friday, Jun 10, 11 @ 12:39 pm
No. Corporations get the same protections and same services as individuals.
It’s just easier for them to holdup government for tax breaks, although the CME and CBOE examples are ridiculous in the extreme.
Unless they’re going 100% electronic, they’re not going anywhere.
Comment by wordslinger Friday, Jun 10, 11 @ 12:41 pm
We need to do a better job marketing. When all the numbers are considered, Illinois is competitive.
Comment by someonehastosayit Friday, Jun 10, 11 @ 12:43 pm
@truthteller:
And I’m fed up with companies leaving IL or closing down. Your comment seems to assume that if we charge them more, the classrooms get smaller, teachers get paid more, and there is more money for the disabled. Well, I drive by closed factories too often to not know what happens after reality crashes into the fantasy you’ve just alluded to.
If you REALLY cared about pumping up receipts, you’d want MORE companies, big and little, in your area. Sorry, that’s reality. Companies that aren’t present don’t pay quite as much IL tax. The jobless that used to work there tend to pay less taxes, too…and spend less. Complain about the system all you want, but unless you have a REAL alternative…
Comment by Liandro Friday, Jun 10, 11 @ 12:45 pm
Need to repeal this tax increase and change the personal income tax from being a flat tax.
Comment by bourbonrich Friday, Jun 10, 11 @ 12:47 pm
Actually, corporations have more options and rights than individuals, and they’re technically immortal. Corporations are creations of the state and should pay substantial taxes for all the privileges enjoyed like limited liability for stockholders.
Comment by Louis Howe Friday, Jun 10, 11 @ 12:53 pm
Yes. It’s small businesses that are hurt the most by the tax hike. The big boys can simply threaten to move and shake down the state for subsidies. In that way, a higher corporate tax rate actually helps them, since their smaller competitors don’t have the resources to obtain the same benefits. When their smaller competitors go under, the larger companies will simply pick up additional market share and charge higher prices.
Comment by Anonymous Friday, Jun 10, 11 @ 12:54 pm
I had to say no because the corps should pay their fair share. Fair means that the budget should be free of waste, corruption and special interest pandering. The taxes should then be distributed between revenue streams appropriately.
We need to have smart revenue streams-like casinos in places that attract tourist and out of state dollars.
We need to close corporate loop holes so the taxes are fair for big, medium and small businesses.
We need to pay our delinquent bills,
We need to add fair pension and benefit reforms.
We need to cut waste and fraud in Medicaid.
After the states fiscal house is in order then corporate taxes, as well as all others need to be reviewed.
Wasn’t that easy.
Comment by Phineas J. Whoopee Friday, Jun 10, 11 @ 12:57 pm
It could be scaled back a bit, but not all the way back to what it was before the recent hike. I don’t like taxes but I do like some government services so we need to raise money.
Comment by Fed up Friday, Jun 10, 11 @ 12:57 pm
Repeal it because it doesn’t “work” the way it is supposed to work. We all (states and feds) need to rethink the way we raise government revenues in this new age we live in. We keep tweeking old-fashioned taxes instead of being creative and practical. We basically shifted from a “production” society to a “service” society years ago, yet we tax “sales” and not “services”. How dumb is that?
And I gotta believe that in this economy, a lot of jobs and a lot of sales are “off the books”, and no government gets a penny from those. Is it so hard to see that we need a different approach?
Comment by wordonthestreet Friday, Jun 10, 11 @ 1:00 pm
The corp tax rate will need to stay where it is for now. Large corporations do hijack the state for tax breaks - yet the CEO’s are paid beyond imagination. Also the recent survey said that between 35% and 50% plan to no longer offer health insurance to employees when health insurance reforms moves through in a few years - more money, more money. By the way Illinois has the lowest per capita staffing rate in the country (state staff)
Comment by sadie Friday, Jun 10, 11 @ 1:03 pm
*finding a way to replace the revenue or cut the budget*
I better take a breath… Whew! There we go. My answer is “no” a thousand times. I don’t like taxes either, but I pay them. I’m not trying to be melodramatic, but at a time when regular folks are losing services that will undoubtedly lead to some of their deaths, I’m exhausted by the corporate whining from the privileged class. Taxes are a cost of living in a civil society. You don’t want to pay, go somewhere else. The only way I could be in support of this is if all of the replacement revenue (no cuts) came from somewhere else in the corporate welfare world. I know that has zero chance of happening so, I reiterate, no.
Comment by TwoFeetThick Friday, Jun 10, 11 @ 1:06 pm
Yes, but only at the same rate as an income tax reduction. If we only freeze State spending for the next two years a sizable reduction would be feasible.
Comment by downstate hack Friday, Jun 10, 11 @ 1:06 pm
===You don’t want to pay, go somewhere else. ===
Famous last words.
Comment by Rich Miller Friday, Jun 10, 11 @ 1:11 pm
No. It’s not excessive, and the state of Illinois takes substantially less revenue per capita than many other Midwestern states.
We desperately need tax reform, but tax reform should be more focused on further flattening; for example, applying the sales tax to services but sharply reducing the overall rate, and removing special interest business exemptions in return for a lower overall rate. But the state’s tax take should remain about the same overall in the long run, and could actually stand to be temporarily increased for specific purposes such as dealing with the backlog of bills, the backlog of repairs to infrastructure, and severely underfunded (and therefore excessively high property taxing) school districts such as those in some of the poorer suburbs of Chicago.
Comment by Angry Chicagoan Friday, Jun 10, 11 @ 1:19 pm
I think first before repealing tax hikes, close every loop hole possible so companies don’t skip out on paying their fair share.
Comment by ah-HA Friday, Jun 10, 11 @ 1:22 pm
CME probably just doesn’t like a new casino coming in where people can gamble on something besides pork bellies.
Comment by just sayin' Friday, Jun 10, 11 @ 1:26 pm
I voted no, because I suspect many of these blackmailers are already getting a lot of state & local breaks. CME, for example, reportedly received $15 million in TIF money for renovations despite very healthy profits (http://www.suntimes.com/news/5397908-418/community-activists-want-tif-funds-to-help-rebuild-neighborhoods.html). Also take a look at all the companies that receive EDGE and other tax credits: http://www.ilcorpacct.com/corpacct/ProgressReport.aspx. CME Group is on that list, too!
Comment by yinn Friday, Jun 10, 11 @ 1:26 pm
If tax breaks for the wealthy and corporate giveaways generated the jobs that some think they do, then we should be living through some rip-roaring good times as a result of Bush’s tax cuts and Obamba’s continuation of them. Instead, government is trying to figure out if the roads should be paved or the fires put out, and John and Jane Smith are crushing up their pills and making soup out of them, because that’s the only way they can afford to both eat and take their medicine. Federal policies have destroyed, not created jobs (well, not jobs that you can live off of, anyway), and that lack of tax-generating employment has decimated state and local revenues.
Funny, but the periods in our history when tax rates were higher (the 1950’s, ’80’s, ’90’s, for example) are the periods when the economy was stronger. Why is that? I’d venture to say (and, obviously, I didn’t come up with this) that it’s because there wasn’t a lot of wealth sloshing around at the top that had nowhere to go but into bubble-creating market speculation. Instead, wealth was taxed, which generated revenue, which paved roads, built and maintained infrastructure, and educated people, so that they could take on business ventures that, in turn, created more jobs and wealth.
I understand the difficult position of maintaining a balance between a climate that is business-friendly, and killing the corporate goose but, sheesh, when is enough enough?
Comment by TwoFeetThick Friday, Jun 10, 11 @ 1:40 pm
I don’t know, maybe I should ask my State Legislator…or my County Board Member…..or my Township Committeman….or my Forest Preserve Member…or….transportation department….or….etc.
A whole lot of crap needs to get fixed and should get fixed before we start targeting corporations and people for additional financial handouts.
However, those fixes are too hard….it’s really easy to shakedown the people and the corporations.
While as a small business owner is makes me a little upset that only the big corporations get taken seriously, I applaud them for doing to the government what they’ve been doing to us for years.
Comment by DuPage Moderate Friday, Jun 10, 11 @ 1:40 pm
*Obamba’s*
Ugh, Obama’s.
Comment by TwoFeetThick Friday, Jun 10, 11 @ 1:44 pm
No. Corporate citizens of Illinois shouldn’t be treated differently than other citizens of the state who pay taxes. We’re all in it together, “it” being the work of balancing the state’s budget, reducing its deficit and - hopefully - doing so in a way that doesn’t depend entirely upon eliminating entire streams of funding for schools and social services and public safety.
Those commodities help form the very basis of the kind of communities in which businesses should want to locate and their workforces live. No business leader should want to operate in an area where budget cuts have slashed general state aid for local schools, mental health services, addiction prevention and treatment, etc. When we lose those things, we lose the supports that help keep households, families and workforces strong and stable.
Big businesses already get quite a few breaks - tax expenditures - that far outpace the breaks given to individual taxpayers, and these expenditures never seem to make the headlines.
This year alone, bigger businesses in IL are enjoying $5 billion worth of accelerated federal tax breaks through bonus depreciation, and the state is kicking-in $600 million of state tax breaks for the same. That state-side break happened automatically, without a single moment of actual policy debate in Springfield.
Bonus depreciation is a boom for big businesses, and a bust for everyone/everything else in the state. Cuts in preschool, after-school programs, mental health services, homeless-prevention programs, etc all are being driven $600 million deeper because of it.
“Decoupling” from bonus depreciation would have cost businesses absolutely nothing at all - they’d receive the same amount of tax breaks, on their normal depreciation schedule. They just wouldn’t get those breaks speeded-up.
Failing to decouple - that’s costing a lot of kids, seniors, folks with disabilities, people struggling with addictions and other problems.
Comment by Noble Friday, Jun 10, 11 @ 1:46 pm
No, as has been said corporations need to pay their fair share. I do agree with the folks who say corporate tax breaks need a good intense review and revenues reclaimed should be used to lower the overall rate.
BTW, on all the talk about exchanges moving. The trend today is to get your data centers and traders as close as possible electronically to where the trades take place. Those microseconds can cost them millions or earn them millions. Chicago is one of the best connected cities in the world to the International and National networks. There may be a few better but they are not Indianapolis or Little Rock.
Comment by JimF Friday, Jun 10, 11 @ 2:01 pm
Heck no. Double heck no. The problem is, too many Illinois corporations are not paying anything. Everybody needs to pay their fair share.
Illinois corporations benefit from access to an educated workforce, great logistics, wonderful cultural institutions that add tremendously to quality of life, extraordinary research institutions, and a lovely climate. Okay, scratch that last one.
But seriously — if you benefit, you should pay. The problem is, we don’t do a good job of enforcing that basic idea of tax fairness. Once one company gets a sweetheart deal, the rest want one too. And when every major employer with a lobbyist gets a humongous tax giveaway, that throws the burden on the small businesses that are least able to afford it.
If we’re going to offer tax breaks, we should do it in a way that’s fair and thoughtful. And if we don’t — I’m going to move to Wisconsin!
(please feel free to send me my tax incentives now that I have threatened to leave. I will be home all afternoon.)
Comment by soccermom Friday, Jun 10, 11 @ 2:03 pm
== Should Illinois’ corporate income tax hike be repealed - after finding a way to replace the revenue or cut the budget? ==
Illinois currently has a debt of ~145 Billion dollars. To eliminate that debt, the current generation of Illinois politicians should target a revenue surplus of ~5 billion dollars annually. This will ensure that the debt is paid off over a term of 30 years. Until the revenue target is met, no new programs should be created, and no tax cut should be passed.
This is a policy I like to call “Fiscal Responsibility” - ya think it will catch on? >.
Comment by JN Friday, Jun 10, 11 @ 2:07 pm
===The problem is, too many Illinois corporations are not paying anything. Everybody needs to pay their fair share. ===
That was RRB’s argument for the GRT. Just sayin…
Comment by Rich Miller Friday, Jun 10, 11 @ 2:09 pm
@Noble: “We’re all in it together”.
Precisely. It seems as though the only time we expect companies and people to interact is in the context of people having to have companies to work for and never the reverse, that the companies need people who will work for them. If businesses won’t be good corporate citizens of Illinois and contribute to the cost of maintaining the state’s infrastructure and programs that benefit the real citizens, then why would we want them here?
The answer is always jobs jobs jobs, that’s why we want them here. And the free market will dictate that higher taxes will drive them away, so heaven forbid we do that. If the free market works that way, then all those people who are put out of jobs should be able to create their own new businesses to not only fill the void left by the outgoing business but also find new opportunities with all their free time. But that’s not what happens, is it? Not just anyone can step up and create a new business, and that is exactly what is wrong: we don’t have free markets, not everyone is able to be the next Newlson Rockefeller or JP Morgan, and we need to stop acting like it’s 1890 and embrace the new economy, for better or worse, and start making real, rational decisions about what kind of state we want to live in.
If you read through an Econ 101 textbook, you’ll find it is just as full of propaganda as The Communist Manifesto, but apparently this is ok propaganda. I’m not saying Marx was right in his predictions about the inevitable worker’s revolt (far from it, not only won’t it happen but it would be a terrible idea). What I am saying is that his understanding of the inherent problems of capitalism were spot on, and rational people can’t just ignore the inherent problems in capitalism or we end up in a position where privately owned organizations are demanding special treatment and public money in exchange for not doing something that would harm the people of Illinois.
Comment by Colossus Friday, Jun 10, 11 @ 2:16 pm
RRB is also a fan of Pie. That fact does not invalidate all pie.
Comment by JN Friday, Jun 10, 11 @ 2:19 pm
No, it shouldn’t be repealed. However, it could be reduced by 2% to make up for the personal property replacement tax and put it on par with the individual rate. The 9.5% figure includes the income tax and the PPRT. So I might consider reducing the combined, effective rate to 7.5% for corporations.
Because of federal tax rules, a lot of corporations are able to legally avoid paying state taxes. Decoupling makes sense too.
But before we give CME a handout, can we get a kiss first? A little romance before getting screwed helps.
Comment by 47th Ward Friday, Jun 10, 11 @ 2:20 pm
I think there needs to be some clarification. When we talk about the “corp” tax rate, we are generally talking about the larger corporations that are formed as a C corp. The majority of businesses are S corps and are taxed at the individual level so they pay the individual rate. (They do also pay a 1.5% replacement tax, but are able to deduct compensation which is a large deduction.) Second, 2/3’s of C corps that file an Illinois tax return, pay zero income tax.
Going back to CME, saying the tax hike will cost them $50 million. I looked at their annual report, and on the top of page 55, it states that a change in Illinois tax law resulted in a “$38.6 million reduction in net deferred tax liabilities.” In other words, Illinois passed a law that saved them $38 million. I am not sure what law they are talking about, but I’m guessing that newspapers didn’t run an article about these savings… Count that against the increase in $50 million (assuming that is accurate, we’ll see on their next annual report) and it only cost them $12 million. Still sizable, but not $50 million. You have to count the good with the bad.
Corporate income taxes are complex. A requirement for companies that want tax credits and what not, to make their illinois income tax return public, or at least certain portions of it would be beneficial. I know they say the returns have proprietary information and the like, but if you are seeking public dollars, you should disclose more information than a company that isn’t receiving tax dollars.
Comment by Anon Friday, Jun 10, 11 @ 2:23 pm
===That fact does not invalidate all pie. ===
Depends on the pie.
Comment by Rich Miller Friday, Jun 10, 11 @ 2:23 pm
*That was RRB’s argument for the GRT*
True. But the problem with the GRT and RRB’s attempt to pass it was no one in the administration had any idea what impact the GRT would have. Would it raise the cost of a car made in Illinois by a few hundred dollars, or a few thousand? Would it make goods made in Illinois more expensive than goods produced outside of Illinois? They had no answers. At least, no answers that anyone believed.
I think soccermom makes a good point. We should find a way to make everyone pay their fair share. Don’t know how that happens, but maybe I’ll figure something out after I get done smoking up here in Utopia Land.
Comment by TwoFeetThick Friday, Jun 10, 11 @ 2:25 pm
– A requirement for companies that want tax credits and what not, to make their illinois income tax return public, or at least certain portions of it would be beneficial. –
That would be nice. But, as has been reported here and elsewhere, the Quinn administration currently is refusing to release the names of many corporations getting breaks, believe it or not.
Comment by wordslinger Friday, Jun 10, 11 @ 2:27 pm
The names are released eventually. I understand that there needs to be some confidentiality before the deal is done. Otherwise the competitor can cause havoc. But after the deal is closed… But a law would have to be passed and business will scream bloody murder and if they were required to disclose certain information, they would not apply for the incentives and then go to a State that gave out the incentives without the disclosure requirement.
Comment by Anon Friday, Jun 10, 11 @ 3:35 pm
@Anon
So we should just give them what they want and not ask for anything in return? This is extortion, pure and simple. “Awfully nice jobs these people have, here. Shame if something happened to them…”
Comment by Colossus Friday, Jun 10, 11 @ 3:41 pm
Looks like Mr. Jimmy John is doing fine for himself without a corporate tax break: http://www.smilepolitely.com/splog/jimmy_john_is_a_big_man._with_the_photos_to_prove_it/
Comment by thechampaignlife Friday, Jun 10, 11 @ 3:42 pm
When you tax a company, everyone pays more for that company’s product, so you really only tax yourself.
Worse, you give businesspeople the impression that you don’t want them to do business in your state.
People are hired when businesses grow. When you tax businesses, you raise their product prices and make them less competative.
With the kind of anti-business news we are creating in this state, you would think steps would be taken to help offset that bad image.
Repeal it.
Comment by VanillaMan Friday, Jun 10, 11 @ 4:33 pm
VMan, you could apply that logic to individuals as well.
If no one and nothing is taxed, it’s just a gangbusters, laissez-faire economic-growth Shangrila. Like Somalia.
Comment by wordslinger Friday, Jun 10, 11 @ 4:41 pm
I voted yes…but here’s the measure I’d like voted on:
1. Close $1.4 billion in corporate income tax loopholes.
2. Lower the personal income tax to 4%.
3. Lower the corporate income tax to 6.4%
4. Close the sales tax loophole to include services.
5. Lower the state sales tax to 5%.
6. Cap the retailers reimbursement.
7. Place a Constitutional amendment for a graduated income tax on the ballot for the 2012 elections.
THAT is real tax reform.
Comment by Yellow Dog Democrat Friday, Jun 10, 11 @ 4:46 pm
=== Depends on the pie. ===
This was my first Christmas without pistachios.
Comment by Yellow Dog Democrat Friday, Jun 10, 11 @ 4:47 pm