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* Senate President John Cullerton told Fox Chicago this week that he’d be willing to lower the new, higher corporate income tax rate rate by closing some tax loopholes…
Cullerton said if he can replace the revenue some other way, he would be willing to move immediately to cut the new income tax rate on business, presumably to a level even with Indiana’s 8.5 percent or even lower.
Cullerton said if certain tax “loopholes” were closed, the overall rate could be reduced.
“We could easily do that. We just need cooperation from Republicans,” Cullerton said. “We would actually be shifting taxes, not raising them. We won’t have to raise taxes any more.”
That could open up a whole new can of worms, and I’m not sure the Republicans would cooperate. Those “loopholes” have been in place a very long time and they’re mostly devised to allow the bigger companies avoid paying the full freight.
The reason Cullerton said he’d need GOP cooperation is that it now requires a three-fifths vote to advance a bill that changes the tax hike law.
* Lowering the rate could help stem the bad publicity from this tax increase and cool out the beasts next door…
The Indiana Economic Development Corporation is already targeting companies that have publicly stated they are looking to leave Illinois. The revelation was included in Governor Mitch Daniels’ budget presentation to the State Budget Committee. Lawmakers in Illinois approved massive tax hikes this week, and Governor Pat Quinn signed the increases into law Thursday. […]
A bill to decrease Indiana’s corporate income tax rate is being filed at the Statehouse. State Senator Brandt Hershman (R-7) says it is the result of several hearings into the issue, not a sudden reaction to developments in Illinois.
* Wisconsin is preparing a jobs tax credit bill…
Republican lawmakers have nixed GOP Gov. Scott Walker’s plan to give tax breaks to small businesses and replaced it with a measure that would cut taxes for businesses of any size that create jobs.
Rep. Robin Vos (R-Rochester), co-chairman of the Joint Finance Committee, said Wednesday he planned to make changes to Walker’s bill so that it would provide businesses a $1,000 tax deduction for each job they create. Walker said Wednesday he could support the idea.
Illinois has one of those as well and it’s bigger, $2,500 vs. Wisconsin’s $1,000. Illinois’ applies to companies with 50 or fewer employees, but that’s 95 percent of Illinois businesses. Illinois’ credit expires in June.
But now we know what Gov. Walker really is. A blatant media hound…
As for the state divide, Mr. Walker is happy to talk about it beyond business and the economy. “I was kidding the Chicago media guys, saying ‘Have me back on when the Packers are ready to beat the Bears, and I’ll talk some smackdown.’”
Yeah. OK. That’ll help attract lots of Illinoisans.
* This is rich…
But New Jersey? Trenton is about 900 miles from Springfield, Ill. Jersey City is a 13-hour drive from Chicago. None of that deterred Gov. Chris Christie, a New Jersey Republican who spent much of last fall stumping around the country, from speaking up even before Gov. Patrick J. Quinn of Illinois, a Democrat, had signed the legislation.
“I’m going to Illinois,” Mr. Christie said in an interview on Wednesday. “I mean soon. I’m going to Illinois, personally, and going to start talking to businesses in Illinois and get them to come to New Jersey.” […]
Illinois raised its personal income tax rate to 5 percent from 3 percent, and its business income taxes to 9.5 percent from 7.3 percent. Despite the eye-catching increases in Illinois, New Jersey may have a tough time making the case that it offers businesses a friendlier environment.
New Jersey’s personal income tax — 6.37 percent for married couples earning more than $150,000 a year, and 8.97 percent for those making more than $500,000 — is among the nation’s highest. The state’s business income tax is 9 percent for businesses with income over $100,000, so Illinois’ is now somewhat higher, but Illinois has lower sales and property taxes.
Keep in mind that many small businesses and corporate execs are more concerned with the personal income tax than the corporate tax. It’s no contest there, especially considering that state’s high property taxes. And things are not going so great there…
After cutting spending for schools by about $1 billion last year, the Christie administration today was ordered by the New Jersey Supreme Court to prove the reduced funding can sufficiently provide a “thorough and efficient education” to the nearly 1.4 million children in the state’s classrooms.
And…
If nervous investors were looking for another excuse to stay out of the battered municipal bond market, they got it from New Jersey Gov. Chris Christie on Thursday.
Speaking at a town hall meeting, the Republican governor warned that healthcare expenses for public workers “will bankrupt” the state if those costs aren’t reined in.
Christie may not have meant it to be taken literally, but a governor probably shouldn’t be dropping the B-word in a muni market that is already so badly spooked by fears over state and local government budget woes.
Prices of muni bonds fell broadly for a fourth straight session Thursday, driving yields on some securities to new two-year highs.
Oops.
* Related…
* N.J. cuts bond sale after Gov. utters ‘bankrupt’ - New Jersey Gov. Chris Christie said Tuesday that health care costs “will bankrupt” the state; minutes later, the state Economic Development Authority slashed a bond offering by about half.
* Minnesota to Wisconsin: Pay up: Wisconsin is overdue in paying Minnesota $58 million — and Minnesota wants the money now.
posted by Rich Miller
Friday, Jan 14, 11 @ 11:30 am
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–Christie may not have meant it to be taken literally, but a governor probably shouldn’t be dropping the B-word in a muni market that is already so badly spooked by fears over state and local government budget woes.–
Whoops. Maybe instead of coming to Illinois, he should go back to Disney World.
Comment by wordslinger Friday, Jan 14, 11 @ 11:47 am
lol…
Comment by bored now Friday, Jan 14, 11 @ 12:00 pm
Double whoops:
–Chris Christie is known for his candor, but sometimes blunt honesty has its costs.
The state had to cancel a bond sale today after the Governor said that healthcare costs would bankrupt the state, Bloomberg reports–
http://www.businessinsider.com/chris-christie-bankrupt-comment-2011-1
Comment by wordslinger Friday, Jan 14, 11 @ 12:02 pm
Well, gosh: Christie is only stating the obvious. And IL is in worse shape than NJ.
Pretty funny how Cullerton and the boyz are backtracking already, with talk of backing down that corporate rate.
Won’t be long until they help the working poor, as well. The stories of poor who can’t afford this tax increase are really mounting up.
Of course, I think everyone could agree with helping out a working mom or dad who is having trouble making rent because of Quinn’s lies in the campaign(will veto anything over 1%). Some exemption work needs to be done. Poor working folk are hurting.
I know the guy who is pulling in four state pensions a year is important, too, but come on. At least the poor working stiff PAYS some state income tax, eh?
Comment by Anonymouse Friday, Jan 14, 11 @ 12:13 pm
===And IL is in worse shape than NJ.===
You must’ve missed that tax hike vote. Budgetarily, we’re now in better shape.
Comment by Rich Miller Friday, Jan 14, 11 @ 12:17 pm
Genius from Cullerton, as I’ve been saying all along.
According to the latest tax expenditure report from Dan Hynes, corporations receive a 17% reduction in the current tax rate through tax expenditures.
Close those loopholes and we could lower the corporate tax rate probably down to around 6 percent.
Illinois lawmakers should also consider a Corporate Fair Share Tax for companies that gross over $10 million, but claim zero income.
The great thing about Cullerton’s proposal is it drives a wedge through the Republicans…putting the interests of big business and Main Street at odds.
First thing on the chopping block: tax breaks for the Chicago Tribune.
Comment by Yellow Dog Democrat Friday, Jan 14, 11 @ 12:19 pm
Senate President Cullerton’s remarks appear to state that either way, Illinois businesses will pay the same higher rates. Not exactly an olive branch to small businesses, as most of the “loopholes” are items they can’t take advantage of.
And I know a lot of folks like to bash Governor Christie for his bluntness and candor, but I find it refreshing. Far more refreshing than what we now have. A Governor who claimed he would veto anything more than a 1 point increase in personal income taxes who rushed to sign the bill before the ink was even dry.
Comment by Louis G. Atsaves Friday, Jan 14, 11 @ 12:24 pm
–Well, gosh: Christie is only stating the obvious–
Obviously, a state can’t declare bankruptcy.
He also has a responsibility, if not the common sense, to not dump on his state’s creditworthiness when they’re looking to borrow money. That big pie-hole of his is going to cost his taxpayers real money.
Not exactly a great “business sense.”
Oh well. Back to Disney World.
Comment by wordslinger Friday, Jan 14, 11 @ 12:24 pm
Can anyone play this game?
Comment by The Captain Friday, Jan 14, 11 @ 12:34 pm
Someone should tell Gov. Christie that there’s snow in Illinois this time of year. He’d likely run off to Florida again and leave his state in the hands of the Democratic Senate President to handle the emergencies until warmer weather.
He’s like Gov. Groundhog.
Comment by piling on Friday, Jan 14, 11 @ 12:37 pm
From YDD:
“…corporations receive a 17% reduction in the current tax rate through tax expenditures.”
Forgive my ignorance, but what does that mean?
Comment by MikeMacD Friday, Jan 14, 11 @ 1:04 pm
@MikeMacD -
It means that even though corporations owed $2.2 billion in income taxes in FY ‘08, they paid $367 million LESS because of the various income tax loopholes on the books.
According to the Comptroller’s report, Illinois businesses received an additional $1.3 billion in taxpayer subsidies in FY ‘08, bringing the total to $1.6 billion per year…close to what they paid in income taxes.
If we eliminated ALL corporate tax expenditures, we could basically reduce the corporate income tax rate to around 2-3%.
Comment by Yellow Dog Democrat Friday, Jan 14, 11 @ 1:45 pm
1. Cullerton: Now the fun starts to cut better deals.
2. The rest: Never let facts get in the way of a good sound bite.
Comment by zatoichi Friday, Jan 14, 11 @ 2:01 pm
Gee….I wonder how Navistar feels now, having been wooed by Governor Quinn the candidate with promise to veto tax increase over 1%, and dealing now with the tax increase and a fight with Ft Wayne over grants given…I’d imagine it’s a little warm in the board room!
Comment by LisleMike Friday, Jan 14, 11 @ 2:37 pm
I’m sure Navistar will be just fine. They have plenty of corporate tax loopholes to make up for this. And I know this is surprising to some of those who just refuse to believe it, their tax burden is still lower here. Same goes for all the stupid crowing from Wisconsin.
Comment by anon Friday, Jan 14, 11 @ 2:46 pm
I sincerely hope that all elected officials do thorough reviews of budgets in regards to what can be cut. With the Gov. Christie part of this thread, about the court ordering his administration to prove that reduced funding can provide necessary education after the cuts, I wonder if these politicians are making laws based on political rhetoric and not hard numbers.
I’d rather have a governor lie about one percent of a tax increase and get revenue that has a chance to make inroads in a dire budget rather than have a governor/legislature make cuts to satisfy voters, but have those cuts seriously harm something as important as kids’ education.
Comment by Grandson of Man Friday, Jan 14, 11 @ 3:22 pm
Rich,
You must’ve missed that tax hike vote. Budgetarily, we’re now in better shape.
No we just project that we are in better shape Im willing to wager those projections fall short. Hopefully at the end of the year we are in better shape than Jersey, but actual revenue never seems to live up to projections. I hope te economy recovers and revenues are ahead of projections but this is one stubborn downturn and oil is rising fast which will hurt.
Comment by Fed up Friday, Jan 14, 11 @ 3:30 pm
===but actual revenue never seems to live up to projections.===
It’s not hugely difficult to project income tax revenues.
Comment by Rich Miller Friday, Jan 14, 11 @ 3:32 pm
It’s not hugely difficult to project income tax revenues.
Ask Oregon how that turned out after their last tax hike.
Comment by Fed up Friday, Jan 14, 11 @ 3:37 pm
Oh, please, you got one state? One example?
Comment by Rich Miller Friday, Jan 14, 11 @ 3:39 pm
Rich do you really believe the revenue projections will not be short?
Comment by Fed up Friday, Jan 14, 11 @ 3:47 pm
Californa 2009 tax increase did not meet projections.
Comment by Fed up Friday, Jan 14, 11 @ 3:55 pm
We can’t let the Cheesehead State get a leg up on this one…a word to Gov. Quinn and/or the Legislature: as rightly noted, OUR tax credit for businesses is already better–come June, EXTEND it–or better yet, make it even MORE attractive (e.g. fewer employees limit or slightly highter credit amount)!
Comment by Just The Way It Is One Friday, Jan 14, 11 @ 3:56 pm
Yeah, during a huge downturn. That stuff happens.
If the economy has even come close to leveling off, and they make honest projections, it should be OK. Plus, remember, we have two budget forecasting services in Illinois, and the governor now has to justify his projections by law.
Comment by Rich Miller Friday, Jan 14, 11 @ 4:00 pm
Rich
I hope the projections are close, If not Quinn Madigan and Cullerton are coming back into our pockets, I’m just saying what they predict will happen to help get the bill passed doesn’t always happen.
Comment by Fed up Friday, Jan 14, 11 @ 4:09 pm
Rich,
and the governor now has to justify his projections by law.
Is that anything like the state has to have a balanced budget by law. I think we have seen how that works.
Comment by Fed up Friday, Jan 14, 11 @ 4:11 pm
The balanced budget is by constitution, and it’s so vague that it can’t be enforced. Subscribe.
The statute is far more specific, however.
Comment by Rich Miller Friday, Jan 14, 11 @ 4:12 pm
Cullerton’s press release yesterday was a comedy of errors. In addition to leaving out the personal property replacement tax, he also seems to lack an understanding of the difference between a marginal tax rate and an overall tax rate, and he appears to be ignorant of the standard deduction.
Wisconsin’s standard deduction is $9300 for the lowest incomes, compared to $2000 for Illinois. There’s a break-even point at which Illinois and Wisconsin taxpayers will pay the same overall rate, but it’s somewhere around the median income — far higher than the $10,000 that Cullerton stated.
Illinois taxes the poor more than Wisconsin and taxes the rich less, and Cullerton is proud of that. I guess he’s a true Illinois Democrat.
Comment by Rambler Friday, Jan 14, 11 @ 4:16 pm
Rambler, we have a flat tax strictly mandated by the constitution. Unlike some other provisions, that one is darned clear. Two years ago, the voters rejected a constitutional convention.
Comment by Rich Miller Friday, Jan 14, 11 @ 4:21 pm
There’s been some snarky nonsense among the Midwestern states about tax rates, business climate, blah, blah, blah. But it’s very short-sighted. Appropriately enough, Mini-Mitch seems to be the driving force.
Everyone’s been whacked pretty good in the recession. But I don’t think it’s any secret that for decades rural America has been taking it on the chin.
The Chicago metro is big and diverse enough to muddle through. Indy has Lilly and state government. Madison, of course, is probably the most recession-proof area in the country outside of Austin and Northern Virginia.
But the Decaturs, Peorias, Elkharts, Cedar Rapids, Quad-Cities and other small industrial rural cities can’t catch a break.
The farmers have the backstop of tariffs and price supports. Most get a pretty nice paycheck from the feds every year. But they’re capital-intensive now, not labor. How do you keep the folks down on the farm communities?
Rather than the one-upsmanship, I’d suggest some leadership and united front on our common concerns. Something, perhaps, based around the excellent Midwestern public and private colleges and universities would make some sense.
Or, the rural Midwest can go like the Great Plains did. Unemployment’s low in those states because their kids left a long time ago. Those who remained scrape by or go into the meth business.
Comment by wordslinger Friday, Jan 14, 11 @ 4:32 pm
Rambler, IL corporations have the personal property replacement tax but EVERYONE in Wisconsin pays a personal property tax. That wasn’t added on to the Wisconsin rates.
Comment by Michelle Flaherty Friday, Jan 14, 11 @ 8:10 pm