Latest Post | Last 10 Posts | Archives
Previous Post: Rate rage roundup - Protests and bills
Next Post: Question of the day
Posted in:
* The Chicago Tribune disgracefully redbaited Gov. Blagojevich in a blistering editorial today [emphasis added]…
This constant quest for new hills to climb conveys the governor’s eagerness to solve problems and be noticed. Unfortunately, at a moment when he wanted to sell his state on some controversial concepts, he delivered a divisive populist rant (”middle-class families,” good–”corporations,” bad, bad, bad) that only confirms the perception of him in some quarters as a lightweight. Illinois citizens might have been swayed Wednesday by the bring-us-together touch of Barack Obama. Instead they got Hugo Chavez.
Unconscianably ridiculous accusations like that pretty much negates everything else in the editorial. No matter what I might think of Blagojevich (and the record clearly shows it ain’t much) I’d delete a comment here if the commenter compared the governor to a commie dictator. That editorial board ought to be ashamed of itself and issue a retraction.
Anyway, the goofy editorial goes on to nitpick the proposals to death, proposes alternatives that would have less chance of passing than even the governor’s own plan (like cutting pension benefits for new state employees), and shamelessly flip-flops on its prior support of the guv’s proposed gross receipts tax (probably because the owners sent the message down after the first editorial appeared that Mother Tribune pays little corporate income tax and the GRT would impact the bloated company’s bottom line).
I understand completely the argument that big business is making against the GRT, and I’m sympathetic. But I can’t help but wonder why my own little company is paying more Illinois corporate income taxes than mega corporations like the Tribune. Call me Hugo Chavez, but it’s not fair, and it’s not right.
* To illustrate my point, here’s an excerpt from the Sun-Times coverage…
Buttressing his argument, the governor claimed the average individual taxpayer pays $1,500 in state income taxes. By contrast, he said, 12,521 corporations with Illinois sales of $263 billion paid an average state tax tab of $151.
* For future reference, any time there’s a proposal for a tax hike over $500 million or so, it can be classified as the “largest tax hike in state history.”
Drawing a muted legislative response, Gov. Blagojevich on Wednesday proposed a record $60.1 billion budget reliant on the largest tax increase and biggest borrowing spree in state history.
* The AP compiled some legislative reactions to the budget address…
* Sen. Mike Jacobs, D-East Moline, on launching major new programs: “Do we really need new programs if our situation is so desperate we have to raise this kind of tax?”
* Senate Minority Leader Frank Watson, R-Greenville, on people who lack health care: “I think health care is a laudable goal for everybody. I feel bad for them. But is it government’s responsibility to take care of people from birth to the grave? I’m not so sure that’s my philosophy.”
* Douglas Whitley, Illinois State Chamber of Commerce president, on the economy: “Gov. Rod Blagojevich’s budget plan for state taxpayers is a reckless and irresponsible affront to every employer and worker in Illinois. If this plan is approved, Illinois will most certainly lose jobs and businesses to other states for lack of regard for the economic consequences of his political ambitions for big government.”
* Senate President Emil Jones, D-Chicago, on raising business taxes: “It’s a good plan. It’s a fairness plan. I expect that (criticism) from the Republicans. I expect that from the Republicans, to stand up for the big corporations that pay little or no taxes and the big corporations want to shift it to the individual.”
* You can listen to more reaction to the governor’s budget address by various Senate Democrats by clicking the thingy below (Do you recognize that interviewer’s voice, by the way?)…
* Lots more audio clips can be found at this link.
* The Tribune coverage focused on Democratic legislative reaction…
(T)he reaction of fellow Democrats who control the legislature was mixed, at best, portending a long debate among already feuding political leaders over how Illinois will move forward. […]
[Senate President Emil Jones’] top budget negotiator, Sen. Donne Trotter (D-Chicago), was more cautious after the combined State of the State and budget address. He said that Blagojevich’s plans were “real short” of the support needed to pass and that the governor’s “broad brushstrokes” may well be scaled back by lawmakers.
In the House, Speaker Michael Madigan’s lack of a formal reaction to Blagojevich’s proposals was telling.
Madigan (D-Chicago), who has questioned the wisdom of leasing the lottery, has made no public comment on the governor’s plan for a new $6 billion tax on business gross revenues. But in an analysis of Blagojevich’s budget to House Democrats, Madigan’s staff said the governor offered no rationale for refinancing the state’s public retirement system with the “largest pension obligation bond in history.” […]
“The immediate thing my voters, my citizens, want me to deal with today is not health care, education funding or pensions, but utility bills,” said Rep. Gary Hannig of Litchfield, the House Democrats’ top budget negotiator. “A lot of Downstaters … have to get that issue corrected before we can ever think about anything else.”
* The Southtown also recorded some less than enthusiastic responses and fleshed out a very key point…
“This is a long way from finished. (We) want to look at the numbers because we’ve had too many times down here where we say there is going to be revenue that doesn’t turn out to be,” state Rep. Kevin McCarthy (D-Orland Park) said. “We’re having a hard time meeting our current obligations. Taking on new obligations, unless we have some rock-solid numbers on the revenue side, I think it’ll be very tough.”
State Rep. David Miller (D-Calumet City) predicted “a long hard road for the governor to sell this to the people and the members of the General Assembly.” […]
Key to winning support for Blagojevich’s budget is House Speaker Michael Madigan (D-Chicago). Madigan did not hint Wednesday of his position on Blagojevich’s ideas. Madigan spokesman Steve Brown said they met face-to-face Tuesday night in Blagojevich’s office for a brief overview.
“We think it’s going to require bipartisan cooperation and a lot of stamina,” Brown said of Blagojevich’s plan. “But we really need to see the details.”
That “bipartisan cooperation” line is key. Blagojevich and Jones would like Republican votes, but are prepared to go ahead without them. If Madigan wants to include the Republicans, then the GRT is definitely in deep trouble.
There’s a lot of coverage to wade through and my intern Paul and I have compiled a list…
* Kristen McQueary: Let the goofy budget games begin
* Daily Herald: Governor issues ‘moral imperative’ of business taxes for schools, health
* The Daily Herald live-blogged the speech yesterday.
* St. Louis Post Dispatch: Illinois Governor lays out new tax proposal
* Rockford Register Star: Governor pitches ’07 Budget; highlights
* Copley: Business is tartgeted to aid schools, healthcare
* Editorial: Governor’s big dreams, taxpayer’s beware
* Pantagraph: $60 billion state plan unveiled.
* CBS2: Blagojevich unveils big plan for healthcare, education
* The Southern: New tax plan could hurt business growth
* AP: Governor’s education plan would silence reformers for now
posted by Rich Miller
Thursday, Mar 8, 07 @ 9:27 am
Sorry, comments are closed at this time.
Previous Post: Rate rage roundup - Protests and bills
Next Post: Question of the day
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
“But I can’t help but wonder why my own little company is paying more Illinois corporate income taxes than mega corporations like the Tribune”
How much payroll tax is your company paying?
How many jobs does your company provide, and subsequently, how much personal income tax are the employees of your company paying?
How much money does your company spend a year, and how much is it paying in sales tax?
How much property tax is your company paying a year?
How much is your company paying in capital gains taxes?
How many families is your company providing health care for?
How much is your company paying to the Illinois Department of Employment Security?
What investments in your community has your company made, including philanthropy?
How many retired employees is your company providing a pension to?
Now tell me again, who is paying more than whom?
Comment by Leroy Thursday, Mar 8, 07 @ 9:41 am
I think it’s time to sell my business, retire and moved out of Ilinois.
Comment by CRASH ! Thursday, Mar 8, 07 @ 9:48 am
A local Business owner was on the radio today and brought up an interesting point….They have gotten hit with a one dollar minimum wage increase which he said in turn causes every other employee’s hourly wage to go up too, or face losing valuable employees. Then the GRT, then they are a small business with about 20 people, they do not offer health insurance so he will be his with the payroll tax. He said it will force them to look at downsizing so they don’t hit the 1 million gross sales, thus cutting jobs etc.
I predict if this goes the state will loose a lot of business both Large and Small. Then where is the money going to come from?
Comment by He Makes Ryan look like a saint Thursday, Mar 8, 07 @ 9:52 am
“Leroy” the point is that I am paying more corporate income taxes than they are. Is that fair?
Comment by Rich Miller Thursday, Mar 8, 07 @ 9:55 am
Illinois voters elected him and they have to deal with him. Remember : “You ain’t seen nothing yet!”
Comment by scoot Thursday, Mar 8, 07 @ 9:59 am
From the Sun-Times (as Rich quotes it): “Buttressing his argument, the governor claimed the average individual taxpayer pays $1,500 in state income taxes. By contrast, he said, 12,521 corporations with Illinois sales of $263 billion paid an average state tax tab of $151.”
…Perhaps the real tax swap plan doesn’t lie in swapping incomes taxes for property taxes… but in swapping corporate taxes for individuals’ taxes.
If that stat is true then all I can say is WTF?!!?
I don’t make $263 billion and I don’t buy the bogus chirp that a gross receipts tax is simply going to be passed straight through to consumers. That’s the line public cos. use to protect their investors from any little thing that might ‘negatively impact the bottom line’.
How have we let our country, let alone our state, become so distorted in its priorities that investors are more important than individuals?
Comment by NW burbs Thursday, Mar 8, 07 @ 10:01 am
This governor may not be as bad as Hugo Chavez, and the comparison does cost the otherwise accurate Tribune editorial some legitimacy. However, when it comes to being self-absorbed and self-appointed savior of all, the comparison is not without some merit, they should have compared him to someone less evil.
Comment by leigh Thursday, Mar 8, 07 @ 10:03 am
Love this site and your moderation. “Leroy’s” point though may be that corporate income taxes are by nature a double tax and thus unfair. Whether you pay more is somewhat irrelevant in terms of fairness. Large corporations generate alot of tax revenue; the more profitable the more tax revenue they generate. Corporate taxes like this are self defeating. Hence YOU will be treated no more fairly if large corporations are “screwed” more. Large corporations won’t be being more fair to the community by being “screwed” more.
Comment by Fan of Rich Thursday, Mar 8, 07 @ 10:03 am
He-Makes-Ryan repeats complaints from a small business owner.
Aparently, this small business owner was not informed that about 75% of Illinois companies would be exempt. Only the largest corporations would be facing the gov’s proposals.
Thus, Rich’s comments that he as a small business owner pays more in corporate taxes than, say, the Tribune Co.
Please feel free to let the small business owner know this, unless you’re too partisan to bring yourself to speak about it honestly.
Comment by NW burbs Thursday, Mar 8, 07 @ 10:04 am
The guv’s speechwriters apparently reflect his rather simplistic view of the world, in this case, mean old business vs. the struggling masses. Or perhaps he is already gearing up for 2010. After all, there are more struggling masses than business owners. We know voters respond to
emotional interpretations of events.
Not to say he isn’t right on some level. Companies with fancy accountants and low morals, or both, can easily evade taxes in Illinois. It’s not all their fault. Many are taking advantage of various credits and exemptions which were voted in by, yes, our Illinois politicians—by us, in other words. The GRT is far easier to collect–and far harder to evade, fancy accountants or no.
If not the GRT, what. I sure hope this isn’t going to end up with the tax swap fallback becoming reality. We should all pay attention here.
Comment by Cassandra Thursday, Mar 8, 07 @ 10:08 am
Leigh, I wonder if you would be ok with it if the Trib compared Blagojevich’s tax proposals to Bush’s “security” proposals (which many Americans also find overbearing and obtrusive).
I agree with Rich, the Trib all but called Blago a commie. Time to grow up and remember how to write without resorting to what may amount to Godwin’s Second Law.
Comment by NW burbs Thursday, Mar 8, 07 @ 10:12 am
Rod’s tax proposals may well kill any chance of FutureGen in Central Illinois. Call all these fees what you want they are still taxes and they will be passed on to us the tax paying consumers.
I guess the old saying “Life, Liberty and Property aare always endangered when the legislature is in session.”
Comment by The Federalist Thursday, Mar 8, 07 @ 10:13 am
Your metric is misleading. It is unimportant who is paying more in corporate income taxes.
Who is paying more to the people of the state of Illinois? That is more important.
Suppose my company has 100 employees. I pay $0 in state corporate income tax. I pay over $300,000 in sales taxes to local vendors, have an annual property tax bill of $600,000, an annual payroll of $5,000,000 (resulting in, say $150,000 in state income tax @ 3%). That’s over a million dollars going to various taxing districts within the state. I also save the state money by *not* forcing them to provide health care for my employees, instead I spend close to $50,000 a year on health / insurance coverage.
A small company with $60k a year in revenues with one, maybe two employees, happens to pay $1500 in corporate income tax.
Now who is helping the people of Illinois out, more and what is ‘fair’?
Comment by Leroy Thursday, Mar 8, 07 @ 10:14 am
Cassandra writes: “We know voters respond to
emotional interpretations of events.”
…That explains all those blue buttons yesterday that Gidwitz was passing out. (Why was he even there? He’s not an elected official or a head of a party).
Comment by NW burbs Thursday, Mar 8, 07 @ 10:15 am
Leroy, a company with revenues a thousand or ten thousand times more than mine ought to pay more income tax than mine does. Period.
Comment by Rich Miller Thursday, Mar 8, 07 @ 10:19 am
On another note, if the governor is going to invoke mythical creatures such as Hercules, don’t you think he should at least get the myth right? If your not smart enough or literal enough to use these comparisons properly, then don’t show off your ignorance.
Comment by leigh Thursday, Mar 8, 07 @ 10:20 am
Oh and NW burbs, don’t like Bush’s “security” proposals either, but not sure the comparison works.
Comment by leigh Thursday, Mar 8, 07 @ 10:23 am
To NW Burbs…
The company’s gross sales is about 1.1 million. It is a small local business, with anywhere between 20 and 25 employees. From what everyone is speculating 1 mill is the cut off, that is STILL a lot of small business that are going to get run out of the state.
Comment by He Makes Ryan look like a saint Thursday, Mar 8, 07 @ 10:25 am
You can take the Colonel (McCormick) out of the Tribune but you can’t take the Tribune out of the Colonel. Rich, as usual you are right on.
Comment by Scott Lukas Thursday, Mar 8, 07 @ 10:30 am
Thank God for Tribune Sport Department or that fish wrapping would be out of business. The Tribune Editorial Board is never a disappointment for Laughs and Hypocrisy! The same insulated folks play footsie with real Commies and then try to smear the Governor with the very brush they use? The Trib gets positively gushey as thirteen year old girls around the latest teen hotty, when talking down their noses through the likes of Bomber Billy Ayers and his ‘Old Lady’ Dohrn. The Lexus Lefties get all regular guy when voters finally get parity with Mega-Corporations!
Comment by Pat Hickey Thursday, Mar 8, 07 @ 10:38 am
Rich,
People pay taxes not businesses. Businesses pay 0 taxes, nada, none. They pass along the costs to consumers. You hike the cost of doing business and prices for goods and services will rise. It is as simple as that.
The GRT will charge different companies with equal revenues differently. A doctor’s office making $1 mil per year will pay more in taxes than a PR firm making $1 mil per year simply because the Doctor’s office will have more overhead and thus more receipts to tax.
And question, if corporate income tax is riddled with loopholes, did those loopholes magically appear or did someone or thing make them?
Comment by Greg Thursday, Mar 8, 07 @ 10:40 am
Why in the world are you people (especially you, Rich) taking Blago’s $151 claim as gospel? He has repeatedly demonstrated the willingness to misrepresent the truth (a.k.a. lie) when it will enhance his politics. Today’s Tribune (in the news section, not the editorials) listed off several of Blago’s “misrepresentations” that he made in his speech yesterday. Here’s a suggestion…Don’t go flying off the handle about who pays what, when the only evidence you’ve got has been provided by a proven “misrepresenter”.
Comment by ILvoter Thursday, Mar 8, 07 @ 10:41 am
Just launched a new company in the bio-tech arena. It looks to have a huge impact on agriculture. While our entire investor group is Illinois based, we’ve decided that we will incorporate in Missouri. We weren’t convinced that Illinois was so business unfriendly until this week.
Goodbye Illinois!!
Comment by Illinois Investor Thursday, Mar 8, 07 @ 10:51 am
Has anyone does an analysis of how much corporations (Sub S), legally formed partnerships or certain LLC’s are passing through their profits to individual income and being taxed on that? I don’t believe it is accurate to say that corporations are only paying ‘x’, when in fact legally they can structure their accounting systems to pass it on to the individuals involved and are paying taxes, but at the lower 3% rate.
If this is the loophole that the Gov is trying to close, then address the loophole. But, I am sure it does not amount to $6 billion, so let’s call this what it is, a HUGE tax increase!
Comment by True Comparison Thursday, Mar 8, 07 @ 11:11 am
Why in the world are you people (especially you, Rich) taking Blago’s $151 claim as gospel? He has repeatedly . . .
Yeah, I’ll take the Trib’s word on it . . .yeahh BWAAAAAAAAAAAHHHHAAAAAAAAA!
Dewey WINS!
Comment by Pat Hickey Thursday, Mar 8, 07 @ 11:14 am
True Comparison - great point! I’ll give you a quick example. We have a firm that does approximately $18 million in business per year. Last year we netted approximately $700,000. Because we are a sub-S, our shareholders will pay approximately $245,000 in personal income tax on the pass through profits of the entity.
By comparison, the 3% sales tax will take $540,000 from the firm. Then, we would still pay income taxes on any remaining profit. We are lucky in that we can move operations relatively easily. To say that we are exploring all options for moving the company would be an understatement.
Comment by Illinois Contractor Thursday, Mar 8, 07 @ 11:31 am
Rich:
1.Everyone knows you were silly to incoporate so quit whining.
2. Who even reads editorial pages anymore?
3. Let’s get onto how badly Chiefless Illini will be get beat. I’ll say by 10pts. Can you spell NIT?
Comment by Reddbyrd Thursday, Mar 8, 07 @ 11:32 am
Why is it so hard for people to understand that corporations do not pay taxes nor does the state spend state money. The consumer/taxpayer pays for everything. It does not matter whether it is an investor (corporate) or a wife (sole proprieter) someone (consumer) is going to supply the money. The only choice is going out of business. As the owner of a service business, I intend to have a seperate line item just for this GRT, so when consumers think I am an evil corporation they will visually see what this portion is costing them.
Comment by Logical Thursday, Mar 8, 07 @ 11:41 am
From a 2003 Ernst and young report for the Illinois and Chicago Chambers.
“In FY2003, Illinois businesses paid just under $22 billion in taxes to state and local governments in Illinois. These business taxes accounted for 50.8% of all state and local taxes raised in Illinois in FY2003, putting Illinois substantially above the 42.6% nationwide average business share of total state and local taxes.”
What the those stats today? This is a more telling statistic than simply comparing income taxes, especially when they are probably forgetting to include the 2.5% personal property replacement corporate income tax.
Borrowing money to make pension payments again is irresponsible. Selling the lottery is like a lottery winner taking $1 million up front instead of $200,000 a year for 15 years. Pension obligations must be cut and without any serious action there no one should trust the state government with another penny especially when they are considering gimmicks like this.
Comment by Jeff Trigg Thursday, Mar 8, 07 @ 11:54 am
Corporations that make a profit should pay corporate income taxes. And they do. If the Governor thinks they are allowed to many deductions, he should say which deductions are bad, and push to close those loopholes. That would be sound public policy, and something I could support.
As for how much the Tribune Company paid in taxes last year, I don’t know, and I’m not sure where to find the information. But again, if we’re thinking that they took unfair deducation in arriving at their tax liability, I say “eliminate the deductions.”
But the Governor’s one-size fits all approach isn’t good public polcy, and here’s why. United Airlines is losing money every year, and just came out of banruptcy. They aren’t making money, which is why they don’t pay income taxes. However, they do pay a slew of other taxes, including all the ones listed above.
So, now the Governor wants them to pay a 1.8% gross receipts tax on all airline tickets sold. Can they take that 1.8% out of their bottomline? Nope. Their bottomline is red. They’ve got to pass that cost onto their customers.
Now, who are their customers? Some 80% of all travellers are business travellers. That’s why the notion that the Gov’s proposal somehow protects small businesses is absurd. Small businesses will be paying more for everything, from airfare and computer services to accounting and legal services.
Can small businesses in Illinois just eat those costs? Probably not. What will they do? Pass it along to consumers.
That’s why your going to see every Main Street business group in Illinois make opposition to the Gross Receipts Tax their top priority this year.
Comment by Yellow Dog Democrat Thursday, Mar 8, 07 @ 12:18 pm
Pat, I’d put a very limited trust in the claims of the Tribune and none in the claims of Blago. Even the Chicago media isn’t lower than his level.
Comment by ILvoter Thursday, Mar 8, 07 @ 12:19 pm
If HotRod thinks the current corporate income tax system is unfair– why doesn’t he reform it, or plug the loopholes, instead of creating a entirely new tax program?
Comment by KenoMan Thursday, Mar 8, 07 @ 12:23 pm
What about a company that takes in $1M in revenue but also happens to have $1M in expenses. In that case, a profit does not exist, thus no corporate income tax would be paid. Under the new GRT, that company would now be paying taxes and essentially be operating at a loss.
The LLC, LLP & S corporations could get creamed in this as well.
Comment by Wow Thursday, Mar 8, 07 @ 12:31 pm
“That’s why your going to see every Main Street business group in Illinois make opposition to the Gross Receipts Tax their top priority this year.”
Business will oppose GRT because it makes them pay their fair share for the services that they use to make money. They use roads, state police, airports, etc.,etc.,etc.. Why should the average citizen pay taxes to sudsidize big business? Don’t believe the business hype. They won’t leave. Illinois is too good a place to do business. Maybe United Airlines, referred to above, should cut the seven and eight figure salaries of their top managers. Then they might have a little spare change to pay their taxes.
Does anyone believe that these bloggers are really businessmen who will move their companies? They are probably teenagers hired by Gidwitz to threaten the public on blogs.
Comment by Bill Thursday, Mar 8, 07 @ 12:37 pm
Bill,
Honor Bright? How much is Ron paying?
Ron - listen I can amend my judgment on this OUT Rageous Tax! ( Homage to Skeeter) On FIIIIIIIIInnnne Small Busineesmen, who labor in harness from peep’o day ’til Maw Calls ‘em In - I could By -God - Thump - Some - Tub! For Four Square Honest, Horney Knuckled, Rock- Ribbed Calvinist Shop Keepers Like Helene Curtis or ADM!
Comment by Pat Hickey Thursday, Mar 8, 07 @ 12:44 pm
It is interesting that you would consider a comparison of Blago with Hugo Chavez to be “shameful”, while calling Chavez “a commie”, which I do not believe he is. I do not think he is a member of the Communist Party, or even an avowed Marxist.
What Chavez has done is to move from his original populist position to a very hard Left position. In so doing, he has perceived that he is better off aligning with the rogue states of the world, like Cuba, since he has been inching toward direct confrontation with the United States. His hardening leftism justifies his international position and his domestic statist positions.
Likewise, Blago started out as a “moderate”, proclaiming something for everyone, but in order to justify his populist agenda, now has come around to declaring class war. He may be forced to do so given his isolation within the Democratic Pary.
So the Chavez parallel becomes more clear. We conservatives have noted the syndrome for years. Perhaps you are being too sensitive because pro-welfare state Democrats are more prone to this syndrome, as pro state policies beget even greater statism as time goes on, statism fails, and the people become restless. By becoming the hero of the lower classes, Blagojevich perhaps sees his political salvation. Unfortunately for us peons, like ordinary Venezualans under Chavez, a good economy and society becomes the sacrificial lamb for his salvation.
Comment by Conservative Republican Thursday, Mar 8, 07 @ 12:46 pm
Bill, let’s try to avoid ad hominem attacks against other commenters (even though they often employ them against you).
Others: Some of you are conveniently skipping over the fact that I wrote I’m “sympathetic” to complaints about the GRT. There are good arguments against it. There are good arguments made that more loopholes should be closed instead.
CR: Some on the Right predicted that FDR’s Depression-era policies would make us a commie state. It never happened. Enough with the goofy and disproven slippery slope arguments.
Advocating for health care and school funding and higher taxes on big corporations and partnerships that are avoiding taxation doesn’t make one a Red, no matter what people like yourself may think. It doesn’t mean Blagojevich is right, but it doesn’t make him an asset-seizing commie dictator like the Castro-worshipper Chavez.
Comment by Rich Miller Thursday, Mar 8, 07 @ 12:57 pm
OK, sorry.
Comment by Bill Thursday, Mar 8, 07 @ 1:00 pm
It’s OK. I understand your frustration. The over the top reactions to this plan are a bit goofy. You’d think it was Armageddon Day or something. I would just rather that we keep this a bit more rational.
Comment by Rich Miller Thursday, Mar 8, 07 @ 1:04 pm
Perhaps some of what you perceive as “over the top” reaction to the GRT is that businesses in Illinois have been the target of attacks by Blago since he took office. This GRT plan is just the biggest and most blatant attack. Why is it a crime in this state to own a business, hire employees, pay your taxes and accomplish needed services? Yesterday Blago told everyone he thinks we business owners (yes Bill I really am) are bad and deserve to be attacked and pay for his bloated socialist programs. We are mad and I don’t think anyone should blame us.
Comment by leigh Thursday, Mar 8, 07 @ 1:16 pm
The tax system in Illinois is not insufficient, our government has mismanaged its resources. The real need is for a complete review and overhaul of the taxing structures. Eliminate the Personal Property tax, and refine the other taxes and fees into a system reflecting fairness and providing the necessary funding for only the legitimate functions of state government. Grandiose new programs should be shunned by our representatives and dismissed out of hand. If the taxing system is not structured in such a way as to pit business against citizens and fairness is perceived by all affected then support could more easily be achieved. The governor’s proposal simply worsens an already flawed tangled patchwork of tax laws.
Comment by A Citizen Thursday, Mar 8, 07 @ 1:47 pm
Let’s assume for a minute that it’s true that businesses will pass on the costs of the GRT to the consumer. (It’s not inevitably true, but let’s be real, it’s going to happen.) The calculation for consumers then becomes, do I get enough benefit (in health insurance savings and additional education funding) to justify the additional costs I’m paying for goods and services?
For many people, clearly, the answer will be no — anyone who already has good private health insurance, or lives in a town with a lot of property wealth (two categories that overlap a lot) will pay more with nothing to show for it. But for a lot of people who struggle with health insurance costs, they may well come out ahead on the deal, even if the GRT costs are in fact passed along to them.
I suspect that in Illinois that there are a lot of people who would come out ahead on the Governor’s proposed deal. As with any monumental change, there will be winners and losers, and what makes it frightening is that (a) the winners and losers may be radically different from the winners and losers under the status quo, and (b) a lot of people aren’t sure which camp they’d fall into (the same issue that plagued HB 750 in the spring of 2005 until the Tribune took a stab at explaining who was who).
I would give him at least a 50/50 shot of getting some version of it passed — perhaps watered down, perhaps with a Chicago casino thrown in, certainly with the Speaker putting his fingerprints on it somehow — but don’t forget that the Governor wants universal health care to be his legacy, and that as long as the Senate President sticks with him, it’s going to be impossible to adjourn the session without giving him at least some of what he wants. The Speaker knows that, and while the trenches will be dug and salvos will be exchanged, at the end of the day, chances are that a meaningful percentage of the Governor’s package will be adopted.
Comment by Gus Frerotte's Clipboard Thursday, Mar 8, 07 @ 1:58 pm
Just for the sake of conversation, How much of a sale tax increase would it take to get the money the Gov needs?
Comment by He Makes Ryan look like a saint Thursday, Mar 8, 07 @ 2:10 pm
Interestingly, when I first heard of the Governor’s Address I thought of Hugo Chavez. Apparently, the Tribune Editorial Board had that same thought. Any politician who uses simplistic “black and white” menechean language to describe a complex problem pitting one constituency against another (middle class vs. corporations) is an irresponsible and dangerous politician that has to be resisted.
It’s tragic that leftist ideologues have to keep learning the same lesson over and over again. That government is not society’s salvation. They believe that government is some omnipotent tool that can be used to shape society and solve all of its’ ills, but they inevitably end up causing more harm than good particularly to the precise population they were trying to help in the first place.
Comment by Rosh Thursday, Mar 8, 07 @ 2:26 pm
QOTD Suggestion: Will the GRT pass constitutional muster? Just asking.
Comment by Punley Dieter Finn Thursday, Mar 8, 07 @ 2:46 pm
Well, now. If Illinois business has been a prime target of Blago since he took office, how come they didn’t try a little harder to unseat him in November. His majority was hardly overwhelming in the end.
If I recall correctly, JBT didn’t get huge amounts from anybody, including the “business community.” A few more millions to JBT, who is unlikely to have proposed a GRT, could have saved business a lot of money down the road, if their now loudly expressed concerns are true.
And don’t tell me they didn’t have an idea this was coming. If they didn’t, they should fire their lobbyists. Blago’s shop is a leaky one and anybody with motivation and access could have found out that a GRT type tax was being considered.
Comment by Cassandra Thursday, Mar 8, 07 @ 2:50 pm
American Medical Association is headquartered in Chicago, Illinois. Wonder what their take on all this is? Can’t be good!
Won’t this affect physician’s fees and prescriptions, supplies?
Who on earth from this administration came up with the TAX?
Comment by Tea Leaves Thursday, Mar 8, 07 @ 2:56 pm
What Blagojevich is proposing is huge. Since Illinois is a one party state and Blagojevich is top dog, then what he has to say, regardless of merit, has to be taken seriously. In this case, we have to take it more seriously than he seems to be taking it. On the other hand, history is full of dramatic changes made by little people with big power, this is one of those cases. While the Tribune’s comparison to Chavez is extreme, there is some merit to the comparison.
Illinois is facing a huge proposal that can break the state. So, we have to get serious.
Lets not discuss why a GRT was proposed. Lets discuss GRTs as we know them today, and as we knew them years ago. They died off decades ago for a reason. Regular bloggers know how much I believe in natural selection and honor proven successes in societies, so I wanted to know why they died off?
The bottom line was because they sucked. Governments are forced to constantly tinker with them because they do not recognize reality. They are inheritantly unfair. If we start one here, you will see lobbying on a scale previously unimaginable - even for Illinois. Businesses will be forced to constantly dicker with the legislature as they seek ways to squeeze out profits enough to be competative with other non-GRT states. What we have seen is job losses, business losses and massive frustrations in implementing GRTs. There are real reasons to see Chicago businesses leaving to move across the Indiana line, only minutes away if a GRT is implemented.
GRTs died out because of competition between states for businesses and the ease of moving businesses across state lines. According to The Tax Foundation, if Blagojevich gets his plan passed, Illinois will become a next exporter of businesses. Our state simply cannot rank #47 in business environment when Indiana is hungrily sitting at #12. We will lose more than the $6 billion Blagojevich gets to play with.
Illinois is facing huge problems. Over the past four years we have been seeing our state fall further behind our neighbors as they create growing economies at our expense. Complain all you want about how “unfair” this is, but you cannot kill all the golden geese yet expect more golden eggs. We all learned in college how a saturation point is reached when taxes become too high.
Well folks, we reached that point somewhere around 2003. The last thing we should be doing is eating the survivors starting next year with a GRT.
With his proposals yesterday, Ron Blagojevich has made it clear that he believes there is room in the 21st Century for 20th Century tax policies and social programs. His is not a recipe for progress, it is a nostalgic longing for those days of Elvis he seems always talking about.
We have to take his proposals very seriously. Like the kid behind the steering wheel playing chicken while we sit in the back seat, we have to take this nutjob seriously or we’ll all die with him.
Comment by VanillaMan Thursday, Mar 8, 07 @ 3:08 pm
Corporations have been totally playing us for at least 50 years & have perfected the game. They pay less in income taxes now than they ever did, get property tax abatements that could be going to our schools & are otherwise subsidized by the middle class in a myriad of ways for their Jobs! Jobs! Jobs! that often don’t materialize. Or don’t pay what they said they would. Or they move out of town after a year.
On top of it, here in Illinois companies pay property taxes only on real estate, not on other property as is true in other states such as Indiana. Sweet.
Companies come here for our infrastructure but don’t want to pay their fair share for it. They have to be made to. Blago is on the right track with this. Illinois has also started an accountability program for companies moving here that get state incentives to ensure that jobs promises are kept.
http://goodjobsfirst.org
Comment by yinn Thursday, Mar 8, 07 @ 3:18 pm
“Some on the Right predicted that FDR’s Depression-era policies would make us a commie state. It never happened.”
- Perhaps that’s because the Supreme Court struck down several of his policies, which in turn led to FDR’s failed court-packing scheme. Crack that history book, Rich!
Comment by ILvoter Thursday, Mar 8, 07 @ 3:41 pm
No one has asked the question of whether or not Blagojevich REALLY wants the GRT budget to pass. Does he? A more appropriate comparison than Chavez would be Joan of Arc, the martyr.
Joan of Arc: “She asserted that she had visions from God which told which told her to recover her homeland from English domination late in the Hundreds Year War”
Blagojevich: He thinks God intended to recover lost tax dollars from the fat cats early in his second term
Joan of Arc: “Hampered by court intrigues, she led only minor companies from then onward”
Blagojevich: Stymied by his own Democratic controlled statehouse, he has a record of small accomplishments
Joan of Arc: Witness to the use of chevauchee* tactics which devestated the French economy. *a method in medieval warfare for weakening the enemy, focusing mainly on wreaking havoc, burning and pillaging enemy territory, in order to produce the productivity of a given region.
Blagojevich: Willing to wreak havoc on Illinois’ economy by villifying businesses and corporations.
Comment by Anon Thursday, Mar 8, 07 @ 3:41 pm
Many of you have missed the bigger point of this tax. It’s not just 3%. It’s 3% on every transaction. So, the farmer that sells the bushel of wheat pays 3%. The flour mill that grinds the wheat pays a 3% tax. The wholesaler that sells the wheat pays a 3% tax. The food processor that purchases the wheat pays 3%. The grocery distributor pays 3%. The Grocery Store pays 3%!
If we assume that each of these will add a 20% markup to their cost of the item (and that’s conservative!) the GRT will add over $.32 to the cost of that final item. In essence this 3% sales tax will actually create a tax (in addition to the sales tax) of over 10% on most products in the state.
Comment by Illinois Downstater Thursday, Mar 8, 07 @ 4:31 pm
Hot Rod wasn’t joking when he said he didn’t go to classs at Pepperdine. This proposal shows that and then some. Tell me, if you are Cat or John Deere and you have plants elsewhere, where are you going to expand and shift business to? This game playing corporations versus the middle class is dangerous for ALL of Illinois. And where does it say in the Illinois Constitution that the government is supposed to take care of “the people” from “cradle to grave.” We need to CUT taxes to invigorate economic activity and GRod wants to do the opposite? And he basically said to the Reverend Meeks, “I played you like a violin, thanks for the votes.” He hath no shame.
Comment by Save a horse, Ride a Harley Thursday, Mar 8, 07 @ 4:50 pm
Time organize: www.StopRod.org
Comment by Is He Insane Thursday, Mar 8, 07 @ 8:28 pm
The gross receipts tax, if enacted, will mean full employment for tax lawyers and accountants. I understand the appeal of this tax to the administration. It is easier to come up with a new tax than to attempt to reform the corporate income tax. As a technical matter, it wouldn’t be that difficult to “reform” the corporate income tax to bring in significant additional revenues. That language could be drafted by any of the couple dozen good state tax lawyers in an afternoon. It could be done without raising the rate. However, politically the Governor doesn’t have the will or the mandate, or the relationships with the legislators to go up against the folks that he would have to go up against in order to enact the reform. In contrast, back in the early 80s Governor Thompson managed a significant change to the income tax act through the use of an amendatory veto. But, Big Jim and his staff were a great deal more savvy, both tax-wise and politically, than the current Governor and his posse.
Under the constitution, the Governor can’t raise the corporate tax rate without also raising the individual rate. The drafters of the 1970 constitution put in this slick little limitation to prevent future Governors and legislatures from doing by income taxes, what the current Governor would like to do - put the (initial) burden of tax increases on business, while claiming to protect the interests of the working class.
If the gross receipts tax passes, under the current proposal the corporate income tax doesn’t go away. You just receive a credit against the gross receipts tax for corporate income taxes paid. In addition, the “small businesses” (those with under $1,000,000 in gross receipts) will continue to pay the corporate income tax. As of now, the Governor hasn’t proposed the elimination of the corporate income tax - just the addition of a new gross receipts tax.
By the way Rich, if my math is right to the extent you have more than 2857 subscribers at $350/yr. for capitol fax - you’ll be over the threshold and will have to pay both taxes. (If you don’t have that many paid subscriptions you should - I’ve heard of at least one state agency that employs about that many folks who post your capitol fax on their Intranet site.
In any event, this session will be the most entertaining session in a while. Those who contract lobby will make a ton of money.
Comment by Just the facts Thursday, Mar 8, 07 @ 9:01 pm
I can imagine many businesses in Illinois with gross receipts of slightly over a million dollars.
Many of these businesses might net less than $100,000. A one percent tax on a million gross is $10,000 or an effective tax rate of 10% on a net of $100,000. This seems like a way to implement a very regressive system of taxation on small businesses compared with giant corporations. And as others have commented much of small business’ receipts come from other small businesses, so it seems there would be a compounding effect. Very logically, this added cost of doing business will be passed on down the line with the consumer picking up the ultimate cost. And they will have no means of itemizing this cost as a deduction on their own income tax forms. So, bottom line, the cost of increasing state government may still be born largely by the people.
The loopholes are already being written into the gross receipts tax to favor those with the capability of reducing their “fair” share of this new tax, just as they have avoided their fair share of the income tax.
And, ironically, this tax, coupled with an intended use to expand state supported health care, may give business an added incentive to reduce employer provided health insurance and let the state pick up the tab. If this is increasing socialism then we can fairly label it as such without referencing socialistic extremists.
Comment by vole Friday, Mar 9, 07 @ 7:04 am
It is not socialism for the state to require businesses to provide health care for its employees. If they elect not to they can pay the tax. It is not socialism to require businesses to pay their fair share of the cost of gov’t and the services they use in the course of doing its business. Let the market prevail. If the business attempts to shift too much of the cost of doing business to its customers another business will provide the same good or service cheaper. Illinois is a relatively low tax state. The GRT has a very low rate and is very broad based. Most businesses will be expempt.Illinois will still be a relatively low tax state compared to our neighbors. There is one serious problem businesses will have if they move to Indiana or Missouri as many bloggers have threatened. They and their employees will then have to live there and pay their taxes and no longer enjoy the quality of life we have in Illinois with our better educated children and our healthier citizens who can go to the doctor if they get sick.
Comment by Bill Friday, Mar 9, 07 @ 7:41 am
Food for thought: The Dems keep saying that Ohio has a similar tax. The Ohio GRT is .1% or 30 times smaller than the Governor’s proposal. In addition, the first $1,000,000 is excluded.
When I called an area Senator’s office on the topic, the Chief of Staff said, “You know, the Governor is proposing putting $100,000,000 back into small business development”. Well here in Effingham County (a small County with a population of 30,000) more than $20,000,000 in local investment dollars have been raised for everything from new live theater complex to purchasing a former factory to succesfully attract a distribution firm. My point is $100,000,000 in state invested dollars into new businesses is a drop in the bucket to what’s going on in even the smallest counties in the state.
Finally, such an investment program would surely go to the largest contributor to the governor, or someone who “acts like a godfather” to his children.
Comment by Illinois Downstater Friday, Mar 9, 07 @ 7:42 am
Hey downstater,
You can’t argue the merits so just start whining about Rod and how he is corrupt and make some insults about his family. That stuff didn’t work during the camapign and it won’t work now. We won…and now we are going to work to make Illinois one of the most progressive states in ty
he nation. A state where our schools are equitably funded, all of our citizens can have access to health care, all 3 and 4 year olds have access to pre-school and business pays its fair portion of the tax burden. At least try to get your numbers right before you argue. If you don’t like the new direction that Illinois is headed in, try Missouri or Kentucky. Just don’t sneak back across the border when you need health insurance.
Comment by Bill Friday, Mar 9, 07 @ 8:02 am