* WAND TV…
Lawmakers announced a resolution Monday to withdraw a $3.7 billion progressive income tax hike from the Nov. 3, 2020 ballot.
Illinois House Republican Leader Jim Durkin and Illinois Senate Republican Leader Bill Brady introduced the resolution to remove from the ballot.
The measure would ask voters to scrap the state’s flat income tax for a graduated one. The accompanying Senate Bill 687, also passed during the last legislative session, would implement introductory tax rates ranging from 4.75% to 7.99% starting Jan. 1, 2021.
Illinois Policy Institute pointed to the fact that small businesses and households have been significantly impacted financially by the COVID-19 pandemic.
Some lawmakers said a progressive income tax would exacerbate the economic downturn people are already enduring.
Illinois Policy Institute research shows more than 100,000 small businesses, which file as “pass-through” entities, would see tax hikes of up to 47% under the current proposed progressive income tax.
* Jordan Abudayyeh…
By pushing this resolution, the Republican leaders are using the coronavirus pandemic to advocate for silencing the voices of Illinoisans who now have the opportunity to vote on reforming our tax system. If the Republican leaders believe so strongly that the wealthiest Illinoisans can’t afford to pay their fair share then they should make their case to the voters instead of advocating for them to be removed from the process.
* From the Illinois Business Alliance, which claims to be a “member-driven business league” but doesn’t disclose its membership and is run by a former Illinois Policy Institute chief of staff…
“All across our state, thousands of small business owners dutifully closed their doors to help slow the spread of the coronavirus, and many remain closed today. Small business owners have been forced to lay off employees and over 1 million Illinoisans are unemployed today. Business owners have used personal savings or applied for loans to try and preserve their businesses so they can attempt re-opening when the governor’s closure orders are lifted. Sadly, many small businesses face the prospect of closing forever if they are not allowed to re-open soon.
“As the Illinois Business Alliance has said repeatedly, these are the very same small businesses that would face higher taxes under Gov. Pritzker’s graduated income tax. Raising taxes on small businesses at this time is wrong – morally and economically.
* From the Center for Tax and Budget Accountability, which I do not think has ever met a tax hike it didn’t find a way to like, but still has some reliable numbers…
Hypothetically, if all of the 189,133 taxpayers earning more than $250,000 in income were all sole-proprietors (which they are not), that would amount to just 15% of all small businesses paying more in taxes, while the remaining 85% of small business owners would still pay the same or less under the Fair Tax.
S-Corps and partnerships are taxed the same as sole proprietorships, with the addition of the PPRT. Under the current tax structure, S-Corps and partnerships are also subject to a flat rate income tax of 4.95 percent plus the additional PPRT rate of 1.5%. This is a combined rate of 6.45%. Under the Fair Tax legislation, the combined effective tax rate would range from 6.25% to 6.45% for taxable income less than $250,000 and 6.45% to 8.36% (8.6% if filing jointly) for taxable income greater than $250,000. […]
More so, in 2017, the median income for individuals self-employed at their own incorporated business was $52,020 and for individuals self-employed at their own unincorporated businesses, the median income was $25,453 — far below where taxpayers would see in increase in their marginal tax rates.
Furthermore, according to 2017 IRS data, the average income for partnerships and S-Corporations in Illinois was $65,883. The top 5% of those businesses had an average income of $201,878. The top 1% of those businesses had an average income of $433,299. This means that somewhere between the top 1% and top 5% of businesses, by share of income, would see a tax rate increase. While the businesses in the top 1% could see an effective tax rate increase from 6.45% to 7.62% (including PPRT), that is far from the misrepresented 47% increase often touted by the Illinois Policy Institute. That 47% increase would only apply to, at most, 0.3% of taxpayers with taxable business income over $1 million — assuming all of the 0.3% of taxpayers are small businesses, which they are not — leaving more than 99.7% of small businesses to see a far smaller percentage increase, and 97% of small businesses to see no increase at all.
…Adding… ILGOP Chairman Tim Schneider…
If Governor Pritzker is so convinced that small businesses and people need to pay more, he should start the process of raising more revenue by bringing back to America the billions in inherited wealth he has stashed away in offshore accounts.
Unlike Pritzker, average Illinoisans don’t have billions of dollars in wealth to hide away in secret tax havens in low-tax countries in the Caribbean. Instead of asking middle class Illinoisans to pay more, he should lead by example and allow the state of Illinois to tax his billions at the same rate he wants small businesses to pay.
But alas, Pritzker never will because he believes in one set of rules for him and his family and another set of rules for everyone else.