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Chamber could back larger income tax hike, while new EDGE plan introduced

Tuesday, Jun 27, 2017

* Greg Hinz reported yesterday that the Illinois Chamber doesn’t want to expand the sales tax to services, but can support an income tax rate above 5 percent

[President and CEO Todd Maisch] said his members dislike both the idea of a wider sales tax and the “unconstitutional” aspects of applying it to some types of entertainment but not others. He conceded that eliminating the service tax extension could bump up the individual income tax, which under the GOP proposal would go from 3.75 percent to 4.95 percent, but he said the shift would be worth it.

“Most people get that game” of holding just below 5 percent, he said. “You might as well get to 5.02 or 5.03, if you’re at 4.95 or 4.99.”

The chamber also wants more money for roads, with a new dedicated revenue stream—Maisch leans against a gasoline tax hike in favor of something broader—and is vigorously against a pending clause in a proposed budget pushed by Republicans that would shift $266 million next year in road funds to public transit, mostly in Chicago.

Maisch conceded that shift aims to avoid making cuts in spending for the Chicago Transit Authority, Metra and other agencies that easily could translate into politically unpopular fare hikes. But diverting such funds “upsets a fragile consensus about how you divide transportation money.”

Maisch’s full letter to legislators is here.

* Also from Greg Hinz

A new effort to revive the state’s Edge payroll tax credit has surfaced in Springfield, and while this one lacks the poison pill that made business groups hate an earlier version, there’s no guarantee it will pass amid the larger Capitol budget war.

The new version comes from Rep. Mike Zalewski, D-Chicago. It would extend the program, which expired April 30, but trim benefits for qualifying companies.

For instance, Edge recipients now are able to claim 100 percent of the cost of payroll taxes as a credit against their corporate income tax liability. Under the bill, the credit for net new employees in the state would be 50 percent of their payroll tax plus up to 10 percent for training costs. The 50 percent figure would jump to 75 percent if the facility involved was in an economically depressed area. The credit for retained employees generally would be 25 percent (plus the 10 percent for training).

The plan also toughens language to qualify, saying that applicants must provide evidence that the incentive was “essential” to making an Illinois facility price-competitive with locating in another state.

The June 30th clock is ticking loudly, but this amendment was filed to a House bill on 2nd Reading today. If they get a new Senate vehicle or zip this along right away, it’ll be worth watching.

* Related…

* Retailers sue to stop Cook County soda pop tax

* Why States Are Struggling to Tax Services

* Press Release: IRTBA, Members of Industry to Testify on the Illinois House Floor Regarding Impact of Transportation Construction Project Shutdown - $345 Million and 43,000 Jobs in Jeopardy, New Analysis Shows

- Posted by Rich Miller        

  1. - Honeybear - Tuesday, Jun 27, 17 @ 1:41 pm:

    Corporate welfare plain and simple

    Hundreds of millions

    Not going into our coffers

    Money we desperately need

    Forgiven poof just like that.

    Last year to a car company that has never made a car and will only have 32 employees in illinois for the next three years.

    Fiscal conservatives if you aren’t howling

    Then I call you a perfidious hypocrite

    Go to DCEO website to see the
    hundreds of millions unaccountable and in audited

    That we PREVENTED
    From coming in

    Means you taxpayers pay more

  2. - Amalia - Tuesday, Jun 27, 17 @ 1:42 pm:

    oh, right, an income tax increase, but still a flat tax. combine that with the national Republican healthcare changes and you will leave those of poor and moderate means with very little. Graduated income tax if you want to increase the income tax.

  3. - City Zen - Tuesday, Jun 27, 17 @ 1:46 pm:

    ==Graduated income tax if you want to increase the income tax.==

    Don’t forget retirement income.

  4. - Ratso Rizzo - Tuesday, Jun 27, 17 @ 1:52 pm:

    A flat tax with high property taxes along with higher taxes on services while corporations pay virtually no taxes. Sounds like Illinois is looking out for the middle class…NOT! And as a soon-to-be retiree, I’m all for taxing pensions and all forms or retirement—as long as we are using a graduated tax that applies to all. It not fair that a $30k a year retiree would pay 5% like a $100k a year retiree.

  5. - Maximus - Tuesday, Jun 27, 17 @ 1:57 pm:

    If the gasoline tax is how we have funded our roads and infrastructure then why not increase it to the appropriate level? I never understood why it cant be raised to support the purpose it was designed for: fixing roads.

  6. - Pelonski - Tuesday, Jun 27, 17 @ 2:19 pm:

    Both the gasoline tax and sales taxes have failed to be updated with the changing economy. For example, motor fuel taxes are a set amount per gallon. The number of miles driven per gallon has gone down considerably, so the amount of taxes available for infrastructure repair has also gone down in relative terms.

    With sales taxes, the shift from a product to a service based economy has caused a reduction in taxable economic activity. The only way to keep the amount of tax collected equal in relative terms is to increase the rates on the limited amount of activity we do tax. Right now, sales of products are over taxed and sales of services are under taxed. We would be better off lowering taxes on products and raising taxes on services to reduce the economic distortions which our current tax policy creates.

  7. - DuPage - Tuesday, Jun 27, 17 @ 2:27 pm:

    They could start making giant truck-cranes buy license plates, like most states do. Jesse White considers them “exempt”, a classification that was meant for farm tractors. They certainly tear up the roads, but pay nothing for license plates.

  8. - Ron - Tuesday, Jun 27, 17 @ 2:29 pm:

    I say we eliminate the state corporate income tax altogether and increase personal rates through a progressive income tax. Of course we should eliminate government employee benefit protection as well.

    Illinois will become a lot more competitive with no corporate income tax.

  9. - Ron - Tuesday, Jun 27, 17 @ 2:30 pm:

    Maximus, doesn’t IL have one of the highest gas taxes in the nation already?

  10. - Ron - Tuesday, Jun 27, 17 @ 2:32 pm:

    Pelonski, if the sales tax on goods was reduced significantly, I could get on board with that.

  11. - Really - Tuesday, Jun 27, 17 @ 2:37 pm:

    Did I miss the GOP have a tax increase plan?

  12. - Kevin Highland - Tuesday, Jun 27, 17 @ 2:46 pm:

    Eliminate property taxes, go for 10% income tax but make the federal poverty level for your family size (or some other amount greater than that) the exempt amount Provide the appropriate levy back to the local government units to fund what property tax used to fund. No constitution changes needed. Property Tax Relief provided and Millionaires carry a heavier load while poverty level and maybe middle class actually have an overall lower tax load.

    Most importantly once you own your property, you own your property.

  13. - sulla - Tuesday, Jun 27, 17 @ 3:34 pm:

    “The plan also toughens language to qualify, saying that applicants must provide evidence that the incentive was “essential” to making an Illinois facility price-competitive with locating in another state.”

    In other words, us economic developers have to tell our clients to go check out other states and other localities before we can make them an offer.

    A little analogy here:

    Imagine you’re a shlubby guy about to marry a gorgeous girl who is way out of your league. You’ve chased after this girl for years. Finally you’re in a relationship together and you pop the question and against all odds she says, “yes”!

    Two weeks away from the ceremony, you decide to force your fiance to go on dates with three other better-looking, funnier, more intelligent and wealthier single guys. Just to be sure.

  14. - tberry - Tuesday, Jun 27, 17 @ 3:40 pm:

    Lots of people/organizations seem to have ideas on how to best raise taxes…how about the tax rate goes to 100% and Madigan and company provides residents with a monthly allowance? If the allowance doesn’t seem to be enough, you could hire his law firm to negotiate a better rate.

    It’s a good thing there aren’t any spending problems because nobody has any ideas on how to spend less.

  15. - blue dog dem - Tuesday, Jun 27, 17 @ 3:52 pm:

    Honey. Spot on. Not only fiscal conservatives, but OW type Repubblicans. Progressives like wordsling. ….like Lucky Pierre. Like Ron. Like Sue. Like MrMJM.DEFINitly RNUG. In fact I don’t know anybody who who would like this…
    I think?

  16. - Ron - Tuesday, Jun 27, 17 @ 4:36 pm:

    If there were no state corporate income tax as is rational, there would be no need for EDGE.

  17. - RNUG - Tuesday, Jun 27, 17 @ 4:43 pm:

    == - blue dog dem - ==

    Never did think much of DCCA, as it was known in my days. It hasn’t gotten any better with name changes and age.

  18. - blue dog dem - Tuesday, Jun 27, 17 @ 4:49 pm:

    Ron. Here’s my problem with EDGE. its let’s government pick winners and losers. I think corporate income tax a bit silly at high levels, but the playing field should be level for all. Isn’t that what America is all about?.

  19. - Ron - Tuesday, Jun 27, 17 @ 5:10 pm:

    Yep, I agree. Just eliminate it and tax people’s income.

Sorry, comments for this post are now closed.

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