10 Comments - Candy Dogood - Monday, Mar 15, 21 @ 8:48 am: Every loophole has a beneficiary. The way to close those loopholes is to make the support of the beneficiaries matter less than the embarrassment of supporting the loophole. To create that public pressure requires having some poor staff member go through every single loophole that they’re targeting and every single tax expenditure in order to identify the one’s that don’t provide much or any benefit to the public or perhaps even have the opposite effect of what was intended by the original legislation. This isn’t something to stroll into without having all of your ducks in a row. - people - Monday, Mar 15, 21 @ 9:01 am: When it comes to pleasing corporate interests, there is little daylight between many Ds and Rs. - Facts Matter - Monday, Mar 15, 21 @ 9:05 am: What everyone either doesn’t understand, or ignores, is that 2 of these changes are nothing but interest free loans from affected taxpayers to the state - and those changes represent almost half of the additional revenue for FY 22. Capping net operating losses for 3 years delays the use of the losses, it doesn’t eliminate them. Modifying depreciation deductions shifts the deductions to later years. What the Governor is seeking is a shift in tax revenues to a year in which the state is receiving a large amount of federal assistance while reducing tax revenues in later years in which the state won’t receive additional revenues. Can you say kicking the can down the road . . . . - Al - Monday, Mar 15, 21 @ 9:28 am: A review of tax loopholes? Ha, I can get the pens clicking as lobsters pull out their checkbooks. - Commisar Gritty - Monday, Mar 15, 21 @ 9:53 am: “We’re not hearing that’s going to happen” says the guy who is literally the chair and could make it happen… We’re not hearing means I don’t wanna - Candy Dogood - Monday, Mar 15, 21 @ 10:51 am: ===are nothing but interest free loans from affected taxpayers to the state=== Does this mean my FICA payroll taxes are also interest free loans to the Government? Capping the deduction creates revenue now. The deduction is limited by the total amount of loss anyhow. In the long run the business is going to be able to claim their losses and the point of the change is to change that time table so that revenue is received now instead of revenue being received years from now after all of the losses have been exhausted. Being able to deduct prior year’s losses isn’t a right. As an individual I don’t get to take a loss because my spending exceeded my gross income, or take a loss for the years I paid tuition, etc. Corporations already have an advantage I don’t have and capping net loss deductions isn’t an “interest free loan.” The amount of entitlement it takes to think in terms like that is legendary. - A Watcher - Monday, Mar 15, 21 @ 11:09 am: ===The amount of entitlement it takes to think in terms like that is legendary.=== NOLs have been in the federal tax code since 1918. Not sure when the state began them. They are a serious tool for longer term business planning. - Perrid - Monday, Mar 15, 21 @ 11:51 am: A Watcher, because they’ve been around for a long time, that means corporations have a right to them? It’s not an “interest free loan”, it’s the government taking its money early. If we really want to talk in these terms, how is the government letting the corporation spread the money out over multiple years no a taxpayer funded, no interest loan to the corporation? Trying to stir up outrage, and that is exactly what the phrase is designed to do, is silly and has no place in a logical discussion of how the government is going to pay for the services it provides to the people of Illinois. - Facts Matter - Monday, Mar 15, 21 @ 12:32 pm: Candy - you may not like the characterization, but it is accurate. Once again, here are the facts - (1) Instead of allowing a taxpayer to a use a prior year loss this year, and for the next two years, up to the amount of income, only $100,000 will be allowed. As you note, the excess losses will be deferred and can be used at the end of the 3 year period. (2) The change in the depreciation deduction has the same effect. Instead of expensing the item in the year of acquisition you will deduct a portion of the expense over the useful life of the item. That means more taxes this year, and less taxes in the future. You can dispute my characterization if wish, but it is taking money from businesses today that is going be given back in the future - sounds like a loan to me. So you are taking more money from those businesses today in a year in which the state is receiving federal assistance and giving it back in subsequent years when the state won’t have that additional federal support. That doesn’t make a great deal of sense to me. A watcher - net operating losses have been a feature of the Illinois Income Tax Act since the beginning in 1969. - Juvenal - Monday, Mar 15, 21 @ 2:15 pm: If the goal of the $1 billion in tax expenditures is to stimulate the economy and create jobs — and not just pad profits — then we really ought to be able to produce some evidence that there is a direct connection between the tax expenditures and job creation. No one has done that. So, when you are asking yourself “what’s the economic impact?” of these tax expenditures, it’s helpful to keep in mind that the CARES Act directed $64 Billion into Illinois and the American Recovery Plan is likely to devote even more to Illinoisans. $128 Billion >>> $1 Billion, but did the Illinois Chamber of Commerce or other business groups manage to put a single GOP vote on the American Recovery Plan? No, they did not. We know what we get when we spend $1 Billion on K-12 Education. My advice would be to sunset these provisions with a commitment to reinstate $250M in FY 2025, create a task force within the Budgeting For Results Commission to evaluate all of the corporate tax expenditures to see which give us the biggest bang for our buck and make recommendations back to the GA. Sorry, comments for this post are now closed.