* A new income tax isn’t the only graduated tax Gov. Pritzker has proposed this year. From his budget book…

More than 30,000 video gaming terminals (VGTs) operate in almost 6,800 locations around the State of Illinois. Many of the video gaming operations are single site operations while others may be numerous separate LLCs underneath a larger parent entity. These larger entities may be operating hundreds of video gaming machines at scores of locations around the state, yet they pay the same tax rates as the smaller single-site operations. In riverboat gambling, the state accounts for differing market sizes through a progressive wagering tax. Video gaming should do the same. The new structure will require combined reporting of net terminal income at the parent entity level. The Governor proposes that marginal net terminal income that exceeds $2.5 million per year be taxable at a 50 percent rate rather than the current 30 percent rate.

On the surface, at least, that’s a good idea. The ubiquitous chain video gaming outlets and the “operators” who install the devices all over the state should pay a higher tax rate. The small places, however, should be protected from higher taxes.

One problem, though. The operators and the video gaming outlets split the after-tax proceeds down the middle. So, when the state raises taxes on high-earners, there’s a smaller pot to split and that will reduce the take for the mom and pop operations.

Smaller establishments are not happy…

Barry Gregory owns Crehan’s Irish Pub and Banquet Facility in Belleville. Installing video gaming terminals in his business allowed him to make a number of investments that he wouldn’t have been able to otherwise do after the state’s smoking ban curtailed business.

“The very next day we gave our staff a pay raise, we’ve completely redone the outside of our building,” he said. “It’s been very helpful.”

He’s among the business owners who signed on in support of Bet on Main Street, a coalition opposed to the governor’s proposed tax hike on gambling operators that supply bars, VFWs and other establishments with terminals.

* Again, this is a graduated tax that’s supposed to hit the high-earners, but the lower-earners will also feel the pinch…

Randy Rehmer, owner of Waterloo’s Double R Bar just south of East St. Louis, says raising taxes on video gambling will eat at the $70,000 he makes each year off the machines alone.

Besides bringing more customers to his business, Rehmer says video gambling revenue has helped him remodel the building, hire an extra employee and give his staff pay raises.

“I’ve got nothing against raising the minimum wage,” Rehmer said. “But the state is telling me to pay people more at the same time that it takes money away.”

Rehmer joined several other small business owners at a news conference Wednesday morning. He was referring to a possible tax increase on video gambling terminals

My suggestion: Do the 50/50 split between operators and establishments before the graduated tax is imposed. The mom and pops shouldn’t be hurt by this tax.