* More complaining about the proposed corporate tax loophole closures in Crain’s…
The tax hike only adds to the “ticking (fiscal) bomb” that is Illinois’ $144 billion in unfunded pension liability here, says another relocation consultant, Boyd Co.’s Jack Boyd. Combined, his clients, including some now in Illinois, increasingly are looking at places such as Texas, he says.
In fairness to Pritzker, Illinois is not the only state to be moving its tax structure in his proposed direction, at least in part. For instance, according to the Tax Foundation, a Washington research group that’s fairly conservative but also frequently cited in economic circles, only 16 states grant the full accelerated depreciation that’s now in federal tax code. Pritzker’s proposed change there is worth $214 million a year.
On the other hand, the largest change the governor wants—capping deductions of corporate losses at $100,000 a year for three years, worth $314 million a year—would absolutely make Illinois an outlier relative to other states, says Taxpayers Federation of Illinois President Carol Portman. Such unpredictability is what really irks business, she says. Beyond that, according to the Tax Foundation, Pritzker’s changes overall would reduce Illinois’ business-tax-climate rating from a weak 36th of the 50 states to an even sadder 39th.
What in some ways is most concerning about all of this is the aura of payback Pritzker and his aides seem to have embraced. The message seems to be: Hey, business, you beat my graduated tax amendment, so now you have to pay.
Tens of millions of dollars were spent against a graduated tax rate last year. Deleting specialized loopholes makes the tax structure flatter. Careful what you wish for. /s
* Also…
- Jocko - Friday, Feb 26, 21 @ 12:43 pm:
==his clients, including some now in Illinois, increasingly are looking at places such as Texas==
Was Jack on vacation last week? Someplace without a TV or internet access?
- City Zen - Friday, Feb 26, 21 @ 12:47 pm:
==capping deductions of corporate losses at $100,000 a year for three years==
If it’s just for the next three years, wouldn’t businesses just apply any NOL above that limit over those three years to year four? Isn’t that like borrowing net operating loss deductions from future years?
- walker - Friday, Feb 26, 21 @ 12:48 pm:
Support for individuals in need and. small pass thru business owners “socialism.” Support for big companies “capitalism.” Got it
- Donnie Elgin - Friday, Feb 26, 21 @ 12:52 pm:
=what businesses really want is stability=
Stability is in the eye of the beholder - business leaders might suggest getting to stability through more cuts.
- VerySmallRocks - Friday, Feb 26, 21 @ 12:56 pm:
Hey, Jocko, some folks would rather have “freedom, liberty, deregulation and small government” than drinking water, electricity, paved roads and indoor plumbing.
- Jocko - Friday, Feb 26, 21 @ 12:43 pm:
==his clients, including some now in Illinois, increasingly are looking at places such as Texas==
Was Jack on vacation last week? Someplace without a TV or internet access?
- RNUG - Friday, Feb 26, 21 @ 1:05 pm:
== Such unpredictability is what really irks business, ==
This is a KEY line from the Crain’s story. Businesses can adjust to almost any environment IF they know the rules won’t change.
Yes, it will be painful to change. And it should be phased in if possible. But let’s draw out a 10 year or more balanced fiscal plan; maybe even include a partial sunset if certain goals are met. It can even be a bit heavy on the revenue side AS LONG AS the State uses any excess to pay down debt or a rainy day fund; what people won’t stand for is new spending.
- Commisar Gritty - Friday, Feb 26, 21 @ 1:10 pm:
Agreeing with Walker @12:48 here. “This country has socialism for the rich and rugged individualism for the poor.” Martin Luther King Jr.
It is truer now than when he said it. How can Amazon/Bezos make more money than G-d then pay effectively 0 in taxes? Especially considering they only post losses when deliberately operating at a loss to squeeze out the last hold outs of their competition? These aren’t loopholes, the tax system was deliberately rigged to benefit those on top while saying we don’t have enough money (because of all the tax breaks) to help those on bottom.
- Nick - Friday, Feb 26, 21 @ 1:13 pm:
=== The message seems to be: Hey, business, you beat my graduated tax amendment, so now you have to pay. ===
I mean… why not? There was one way to more evenly distribute the pain of necessary tax increases. And you slammed it, and tax increases on *income* are going to be toxic for a little while. You won, so now here’s the consequences?
- JS Mill - Friday, Feb 26, 21 @ 1:19 pm:
Walker and the Commisar are correct. Back in 2008 and 2009 the bastions of unbridled capitalism (wall street) were beggin’ for government money and they got it big time. Adam Smith rolled over in his grave. There is no true capitalism anymore and the louder the GQP screams about socialism the more they really want socialism for me not for thee.
- Oswego Willy - Friday, Feb 26, 21 @ 1:22 pm:
Causing pain by the Flat Tax being defeated…
…
… yeah, that’s the “Dems controlling things”.
Be careful what you wish for, this will be a fine wake up call to “what’s next”
- Demoralized - Friday, Feb 26, 21 @ 1:33 pm:
Everyone was told that if the graduated income tax rate failed there was still going to be some sort of action to raise revenues. Actions have consequences and the actions by those opposing the graduated income tax are now having consequences.
- Grandson of Man - Friday, Feb 26, 21 @ 1:37 pm:
Stability can be defined in part as adequate or robust education and infrastructure funding, as well as paying bills better. Corporations report that education and infrastructure are key reasons they relocate to Illinois, and we do very well in attracting corporations.
A budget is a moral statement of the people. Are we going to cut further those who were drastically cut under the former governor, who are among the most vulnerable and poorest? Or are we going to seriously look at getting revenue from those whose incomes grew by 40%, due to the massive federal corporate tax cut?
- Perrid - Friday, Feb 26, 21 @ 1:38 pm:
“What in some ways is most concerning about all of this is the aura of payback Pritzker and his aides seem to have embraced.”
For the love of - THE STATE NEEDS MONEY. Either we raise the flat tax, which hurts everyone including middle class people, or we change these “loopholes” for businesses and those businesses get affected. I’ll even be generous and say MAYBE some people get less hours or get let go, fine, whatever.
It’s not revenge, it’s triage.
- Perplexed - Friday, Feb 26, 21 @ 1:53 pm:
Respectfully: Greg Hinz’s reporting suggests that for a growing number of employers, the answer to “What’s next?” isn’t “Relocating to Illinois” or “Keeping jobs in Illinois.” We can fiddle with what looks like punitive tax policy while they burn rubber to other states.
Both the Hinz piece and the Joe Cahill column linked from it warn that Squeezy the Pension Python is strangling our state economy’s future and thus our revenue growth. Props to Chris Welch for tacitly admitting that — paraphrasing here — without serious pension reforms, voters won’t tolerate tax increases.
Choose your cliche: Sour grapes, chip on shoulder, vengeance-is-mine. We’re smugly sending the message that state and local governments here deserve more revenue so taxpayers had better grin and bear it.
Some employers have no choice but to accept that. Some employers have more welcoming and less expensive options. Hinz and Cahill put it better.
- Simple Simon - Friday, Feb 26, 21 @ 1:57 pm:
Illinois will never be truly “competitive” with other states because we need to pay back the pension debt, which is the equivalent of about 2.5% income tax rate by itself. What we need to do is play to our strengths to make Illinois an attractive place to be located. Transport hubs, educated work force, synergizing with partners and customers in the major metro area, ‘business climate” wishes that are not just disguised tax cuts. We will not be the lowest cost option for decades and there is nothing we can do about it.
- Nick - Friday, Feb 26, 21 @ 2:14 pm:
I just don’t understand it.
Did these people actually think Pritzker, following a defeat, would go for taxing retirement income? Or doing the even more popular thing and this time doing an amendment on breaking pensions?
- Anonymous - Friday, Feb 26, 21 @ 2:33 pm:
It might be hard to run your business in Texas with no power or heat and untrained workforce. Good luck to you Jack
- thisjustinagain - Friday, Feb 26, 21 @ 2:44 pm:
The cry from business (especially Big Business) has always been “We can’t afford it (banned punct. mark)” Then they pass the cost to consumers of their products/services, instead of cutting fat-cat salaries and benefits. How many businesses actually pick up and move out of state out of how many? How much does the State actually lose in tax revenue? Tired of hearing the business community whine about taxes, when so many pay so little on so great profits. Please, go to Texas or anywhere else you can get a “free ride”; Illinois can’t afford you.
- Donnie Elgin - Friday, Feb 26, 21 @ 3:25 pm:
=Then they pass the cost to consumers of their products/services, instead of cutting fat-cat salaries and benefits=
I would suggest you watch the scene from Back to
School where Thornton Melon played by Rodney Dangerfield explains business costs.
- City Zen - Friday, Feb 26, 21 @ 3:26 pm:
==How many businesses actually pick up and move out of state out of how many?==
Dear Business,
You can check out any time you like, but you can never leave.
Sincerely,
Hotel Illinois
- Precinct Captain - Friday, Feb 26, 21 @ 3:54 pm:
Texas also has crumbling roads and infrastructure because they won’t invest to keep up with growth.
This is from 2013:
“Texas’ drought and water-supply problems have captured headlines. But with the state’s rapid population growth projected to continue, other infrastructure problems also loom, including clogged roads and a strained power grid.” Strained power grid you say?
https://www.texastribune.org/2013/05/17/texas-grows-infrastructure-constraints-loom/
Roads in Texas have a $15 billion per year need not being met
https://www.enr.com/articles/51189-texas-infrastructure-earns-c-grade-from-state-civil-engineers
- Proud Sucker - Friday, Feb 26, 21 @ 3:54 pm:
===We’re smugly sending the message that state and local governments here deserve more revenue so taxpayers had better grin and bear it.===
I think there is a LGDF cut in the Governor’s proposed budget, so don’t point fingers at us.
- 4 percent - Friday, Feb 26, 21 @ 3:55 pm:
The largest “loopholes” are for individuals - by far. So, let’s close ALL of the loopholes and really go to a flat tax.
No more EITC
No property tax credit
No dependent deduction
No reduced sales tax rate for food & medicine
The vast majority of “loopholes” are for Illinois residents.
- Rich Miller - Friday, Feb 26, 21 @ 4:27 pm:
=== So, let’s close ALL of the loopholes and really go to a flat tax.===
LOL
Yeah, that’ll go over well.
Next!
- Andres Huges - Monday, Mar 8, 21 @ 6:08 am:
Brilliant blog…
- Back Pain - Tuesday, Mar 9, 21 @ 4:34 pm:
There’s certainly a lot to find out about this subject. I like all the points you have made.