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Currie hints at higher corporate taxes

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Illinois

* This sort of talk is freaking out business lobbyists in a major way and is a big reason why so many of them are paranoid and up in arms about Senate President John Cullerton’s proposal to force publicly traded corporations to disclose their Illinois income tax payments. House Majority Leader Barbara Flynn Currie is also sponsoring the measure and had this to say earlier in the week…

“Maybe if we were to find out that there are some very profitable corporations operating in the state of Illinois, we might want to say that maybe they should pay a little more.”

Um, maybe if we find out that there are some very profitable corporations in Illinois, we might look to see how we can make other businesses just as profitable.

I mean, I know what she’s probably getting at here, but, seriously, c’mon. That’s no way to calm the waters.

* In light of Currie’s comments, the Taxpayers Federation’s warnings should be listened to…

An equally scathing review came from the Taxpayers Federation of Illinois, which is known more as a watchdog than an ideological group.

If lawmakers need more information, they can get it from the Revenue Department instead of demanding specific figures on each company, which will “undermine” taxpayer privacy, the federation said in a statement. Passage would make Illinois “an even less attractive state to invest and create jobs” in, and give other states a leg up by pointing to Illinois’ “taxpayer climate.”

* Despite Cullerton’s sponsorship, the bill just barely passed yesterday…

The Senate voted 30-27 Wednesday to OK a proposal Cullerton says would help lawmakers plan tax policy.

The Chicago Democrat says legislators don’t know whether their tax incentives and credits are working. He says two-thirds of businesses doing work in Illinois pay no corporate income tax.

Republicans criticized the measure as “anti-business (and) anti-employment.” Others questioned whether it would be legal to post the information. Cullerton amended the bill to prevent posting of federally prohibited tax information.

There are those who believe that Cullerton’s bill is somehow politically motivated. It wouldn’t surprise me. He has grumbled about Caterpillar’s constant complaints about high state taxes. Cat is suspected of paying little to no income taxes. But Cat’s CEO was mostly complaining early on about the increased personal income tax rate and its potential impact on its executives and future recruitment.

* Other stuff…

* Quinn Expected to Hike License Sticker Fees

* Editorial: Pension problem is no cartoon

* Editorial: Pensions more than python problem - Action, not gimmicks, please

posted by Rich Miller
Thursday, Nov 29, 12 @ 10:28 am

Comments

Meh, I doubt if there will be any push for a higher corporate taxes (and given the vote in the Senate on disclosure, I doubt if one would pass, anyway).

I think it’s a p.r. move. For more than a year we’ve been hearing how corporate income taxes are killing business. Not so much if you’re not paying corporate income taxes.

CME, CBOE and Sears have shown that big business can roll the GA.

Comment by wordslinger Thursday, Nov 29, 12 @ 10:48 am
–“we might want to say that maybe they should pay a little more.”–

We do already have the 3rd highest corporate tax rate in the country and we wouldn’t have to raise our rate very much (probably less than 1%) to become the highest. Rich is exactly right, maybe we should be trying to make other businesses just as profitable. Businesses do hire people when they make money, not sure why Currie doesn’t understand that.

Maybe instead of becoming the highest tax rate state, we might want to look at having a smarter tax system instead of simply raising tax rates? Illinois could even look at decreasing sales tax rates and extending it to more purchases. We could also try to spend our money a little smarter here. I have family in other states that pay lower taxes and seem to actually get better services. Maybe give good government a try?

Comment by Ahoy! Thursday, Nov 29, 12 @ 10:50 am
It would be even better if the SEC required corporations to break down their tax burdens with a bit more detail. The corporations bargain with state and local governments all the time; exchanging the promise of jobs for tax breaks. They imply that they are able to get a better deal elsewhere. But there is often no way to know, and governments race to the bottom on the assumption that they need to go lower. This would allow state and local governments to know what the price points are.

Comment by Pot calling kettle Thursday, Nov 29, 12 @ 10:53 am
I would love to see Cat’s state tax bill.

Comment by soccermom Thursday, Nov 29, 12 @ 10:54 am
==We do already have the 3rd highest corporate tax rate in the country==

The point here is that the “rate” is not necessarily what the corporations pay. Having this info might allow the GA to restructure corporate tax code by lowering the rate and closing certain loopholes.

Comment by Pot calling kettle Thursday, Nov 29, 12 @ 10:55 am
I passed on this when it was the QOTD because I suspect it’s political in nature. I think it’s designed to keep business lobbyists on the defensive and remind IL CEOs who is really in charge in Illinois.

It isn’t anti-business, it’s anti-business lobbyist. I think Cullerton is using this to change the narrative and shine some light on who the actual “makers and takers” are. If this passed into law, you’d see the business coalition fracture, which could open up opportunities to pass other progressive legislation currently blocked by business interests, like a graduated income tax and the cost shift for pensions.

It might be a really smart move to break some of the gridlock on these issues. We’ll see.

Comment by 47th Ward Thursday, Nov 29, 12 @ 10:59 am
=The corporations bargain with state and local governments all the time; exchanging the promise of jobs for tax breaks. They imply that they are able to get a better deal elsewhere.=
Doubt disclosure of income taxes paid to the state will stem the tide of corporate welfare given by the state and local government. And some of these legislators should understand, these corporations can move to other states, like Indiana, with a right to work law. Progressives/liberals seem to have missed the class on basic econmics in college.

Comment by Downstater Thursday, Nov 29, 12 @ 11:00 am
The cognitive dissonance between the risk-taking, hard-charging, entrepreneurs who build businesses and the image of scaredy-cat emotional basket cases who will just freak out if elected leaders talk about a better tax regime is pretty powerful.

The debate on President Cullerton’s bill to provide some data to policymakers and the public on what our most profitable corporations actually contribute in state taxes was instructive, because the complaints were about the tone and the language of making Illinois a business-friendly state instead of, you know, the actual taxes paid and the infrastructure (human and otherwise) that the state government helps to build with that money.

The operating assumption by the opponents is that corporate leaders need politicians to use the right tone when talking about the state budget, our state debt and the contributions that corporations will make, or these corporate leaders will get their feelings hurt and leave.

The corporate tax rate is largely irrelevant if very few corporations pay it. And since the public doesn’t know what state tax rate our corporations are paying, the politicians can’t possible develop tax policy that makes the most sense.

Just because a few business lobbyists choose to stage a freak out doesn’t mean that we should consider that a reasonable or valid response — and it certainly doesn’t mean that the House Majority Leader should not publicly discuss whether profitable corporations that pay no state corporate tax should continue to do so all in the name of “calming the waters.”

Especially when we’re taking hundreds of thousands of people off of health insurance, cutting back retirement benefits for middle-class people and cutting investment in public education (both K-12 and higher ed), I think the civic waters could use a lot more discussion and data about the taxes paid by our largest corporations.

Comment by Dan Johnson Thursday, Nov 29, 12 @ 11:08 am
Let me just say, if you’re not paying anything now, an increase in your rate won’t have any effect on you. (I am learning math, so I can tell you with authority that a 15% increase on zero is zero.)

Comment by soccermom Thursday, Nov 29, 12 @ 11:10 am
–And some of these legislators should understand, these corporations can move to other states, like Indiana, with a right to work law. Progressives/liberals seem to have missed the class on basic econmics in college.–

2011 State GDP, Bureau of Economic Analysis:

Illinois: $670.7B
Indiana: $278.7B

In that basic economics class, would it be correct to say that businesses already have made decisions as to their preferred location?

I mean, they’re right next door to each other.

Comment by wordslinger Thursday, Nov 29, 12 @ 11:20 am
Isn’t the argument for a higher tax rate moot? The IL constitution sets a ratio for the corporate tax rate based on the personal income tax rate, and we woud have to increase the personal rate to increase the corporate rate (or amend the constitution).

The real difference — and why so many corporations pay no taxes — is that the base income for individuals is federal Adjusted Gross Income (i.e., income before federal deductions) while the base corporate income is “taxable income” (i.e., after deductions allowed by the federal tax laws). If we are really looking at ways to increase revenue from the corporate income tax, I would suggest we need to look at this discrepancy first.

Comment by The Other Anonymous Thursday, Nov 29, 12 @ 11:32 am
Did any of these ever pass?

http://blogs.chicagotribune.com/news_columnists_ezorn/2007/09/just-what-are-t.html

Comment by soccermom Thursday, Nov 29, 12 @ 11:42 am
What’s always lost in this debate on corporate tax rates, is that both the potential job creators, and the actual tax payers, are mostly small and medium-sized established businesses. For start-ups income taxes are irrelevant for the early years, and for large corporations they are often very small or zero.

The benefits of lowering the corporate income tax rates, will hit the businesses who are small enough to actually need it, and will help the PR on “business climate” for the state.

Unfortunately these smaller businesses are not big campaign donors, and don’t have lobbyists or Chamber advocacy.

For the average large company CEO and the Chamber, complaining about Illinois corporate income tax rates is just political posturing for other purposes. Actually paying zero, or close to it, is indefensible for those making large profits in this state, when other smaller businesses are carrying the burden.

Comment by walkinfool Thursday, Nov 29, 12 @ 11:49 am
Illinois political leadership is entirely lacking in understanding business. As they chase political solutions, they continue to make matters worse for Illinois business.

These politicians still think business is theirs for the raping and pillaging without harm. The demand for tax information will only allow the business ignorant to reach incorrect conclusions to satisfy their own selfish political goals.

Death spiral state. Only an idiot would move their business operations here. Better pray for more idiots to fleece

Comment by VanillaMan Thursday, Nov 29, 12 @ 12:01 pm
Thank you to walking fool to point out that it’s the smaller companies who are almost always hurt the most. While a lot of small businesses file as S-Corps, many file as LLC’s due to liability issues. Also, the point of government isn’t to try to take as much money as possible from taxpayers.

Comment by Ahoy! Thursday, Nov 29, 12 @ 12:17 pm
47th-

I don’t necessarily disagree with your rationale - the biz folks were pretty frantic this week, and it’s certainly possible that the purpose was to get them to take their eye off of something else. But I’m not totally sure I understand your rationale for the business coalition fracturing if the bill passes - why do you think that would happen? No snark, just curious.

Comment by Joe Bidenopoulous Thursday, Nov 29, 12 @ 12:30 pm
No, Ahoy — the point of government is to protect the lives, property and well-being of citizens, and to provide essential services and infrastructure that citizens cannot match or provide on an individual basis. And you will be shocked to learn that those essential services cannot be provided for free. Because strangely enough, the people who pull you out of burning buildings and chase down the guy with the gun that just stole your mom’s purse — those people really don’t want to do it on a voluntary basis. (Selfish jerks.) Similarly, the people who provide cement, steel and asphalt for roads, bridges and public buildings kind of like to get paid for it. Because, you know, they figure that if you’re going to use that stuff, you should probably pay for part of it.

Should government do everything possible to keep costs down? Of course. Are there places we could trim the state budget without diminishing services? Hell yeah.

But there is no utility to drive-by comments like “the point of government isn’t to try to take as much money as possible from taxpayers.”

And Vanilla Man, you might want to reach out to some of the idiots that are moving their businesses here. Apparently their CEOs disagree with your site-selection analysis.

Comment by soccermom Thursday, Nov 29, 12 @ 12:34 pm
- Dan Johnson - Thursday, Nov 29, 12 @ 11:08 am:
=”The corporate tax rate is largely irrelevant if very few corporations pay it. And since the public doesn’t know what state tax rate our corporations are paying, the politicians can’t possible develop tax policy that makes the most sense.”=
I thank you for setting the ideology and hyperbole aside and making a rational assessment.

Comment by Crime Fighter Thursday, Nov 29, 12 @ 12:36 pm
TFI is right. if some big profitable corporations are paying little if any income tax, look at their deductions and situation and craft a tax policy that makes sense for everyone in that class. dont cherry pick this corporation or that one for criticism.

Comment by langhorne Thursday, Nov 29, 12 @ 1:09 pm
===why do you think that would happen===

I think we tend to think of the Illinois business community as monolithic, and it isn’t. Not all businesses have the same agenda, and I think IMA, the Chamber, IRMA and others will find it harder to convince their members to stick together on certain issues. As smaller businesses discover how large corporations pay relatively little in taxes, you’ll see some fractures in the coalition. You might even see S Corps lobby for a minimum corporate tax for example once they learn that, compared to S Corps, larger corporations are paying a pittance in state income taxes.

It’s just a theory, but I think disclosing this info would drive a wedge into the business coalition and pit them against themselves. If Illinois no longer has a single business “voice,” it weakens their political power on a host of issues.

Comment by 47th Ward Thursday, Nov 29, 12 @ 1:30 pm
Soccermom,

Maybe you should read all my comments on here instead of trying take a single sentence and writing a rambling paragraph about it (in particular the earliest post about tax reform to capture more sales tax dollars, that’s right more revenue). I’m on here every day, it’s hardly a drive by comment.

Comment by Ahoy! Thursday, Nov 29, 12 @ 1:48 pm
Ok, forgetting the whole battle of how much corporations are paying in taxes, this legislation just isn’t well though out in reality. A few issues…

First off, it looks like this only applies to “publicly traded” corporations. In other words, only “C Corp” entities which have their stock listed.

So, no “S Corps” or “LLC” or privately held “C Corps”, or any public “C Corps” taken private. Bankruptcy?

Nothing like equal treatment under the law.

And I’m sure the State of IL will be happy to charge an administrative fee for each paperwork filing.

And then there’s the cost of doing all the extra paperwork.

What is the State going to do? Turn around and provide this wondrous information to local governments, allowing them to ’see’ (and attempt to ‘measure’) the value of their economic incentives?

That’s just what we need in local government, more paper…. Not to worry, we can file it right along with all the other mounds of paper we get from the State of Illinois.

Rep. Currie should also realize this has the potential to smack the high tech industry here in IL (what we have) right in the face. Here’s why….

Many tiny tech startups provide their employees with restrictive stock options long before they ever go public. Still private, but with the promise that if things go right & the biz takes off, they’ll get to cash out in an IPO.

Well, these days there are private exchanges which make a ‘market’ for such stock (for example, see “Second Market”), and there’s demand. Here’s the link:
http://news.cnet.com/8301-1023_3-57361897-93/secondmarket-private-stock-trades-jump-55-in-2011/

Does this proposed legislation mean that IF a private companies stock is traded at Second Market, it’s now applicable to have to make such filings?

What about small startups (not just high tech, but any type) going the ‘crowdsource’ funding route?

Sure would be nice if somebody in the legislature thought this stuff through for a change…

Comment by Judgment Day Thursday, Nov 29, 12 @ 1:55 pm
The corporations have greatly benefited from legislators not paying the pension payments of state employees. It’s time they pay their fair share.

Comment by mid-level Thursday, Nov 29, 12 @ 2:22 pm
The legislation doesn’t go far enough. Since every public employee’s salary is open to the public, why shouldn’t all of the execs of public companies, particularly those who get tax breaks and public contracts, be required to have their salaries published on a state website?

Comment by Truthteller Thursday, Nov 29, 12 @ 5:16 pm