Capitol Fax.com - Your Illinois News Radar

Most big Illinois companies pay less than 2 percent for state, local income taxes

Posted in:

Illinois

* The Tribune has published a very good article on corporate tax burdens. But keep a few things in mind. These numbers are for state and local income taxes. Illinois has no local income tax. Also, these numbers are for all states, not just Illinois. And Illinois changed its tax laws several years ago to what’s known as the “single sales factor.” Only Illinois sales are counted toward a company’s income taxes. The change was meant as a boost to the state’s manufacturers…

In 2010, a majority of Illinois’ top 50 publicly traded corporations paid less than 2 percent of their earnings in income taxes to states and municipalities across the country, with some paying nothing at all or receiving refunds.
[…]

Peoria-based Caterpillar, with $42.6 billion in sales and revenue last year… does 70 percent of its sales outside the U.S. and saw sales plummet by 37 percent in 2009. Its state and local income tax burden that year was minus 3.3 percent of global earnings, which means it was owed money back. In 2010, a year when its sales began to recover, its liability was just 0.7 percent. […]

Infant-formula maker Mead Johnson Nutrition has a low state and local tax burden, 0.2 percent, because only 17 percent of pretax income came from the United States, and within that segment, a lot of sales occur in other states.

* But not every corporation has it so good…

Integrys’ [which owns Peoples Gas and North Shore Gas] state and local income tax burden for 2010 was 5.1 percent of global earnings, tying the electronic health records company Allscripts for the second-highest effective rate among the region’s largest companies, according to the Tribune analysis. At the top was CME Group, owner of the Chicago Mercantile Exchange and the Chicago Board of Trade, at 5.8 percent. All tax-burden figures in this story include an allowable federal deduction.

* More relevant numbers…

While Illinois income taxes generally make up a small portion of expenses for major corporations, and corporate income tax revenues accounted for only 4.5 percent of the state’s general fund revenues in 2010, 18 of the state’s 50 largest public companies have been granted state tax credits in the past decade.

Discuss.

* Related…

* John Cullerton talks workers’ comp, tax increase

* Menard workers still get disability even though doctors clear them to return to work

* Committee to examine state’s business atmosphere

* A drop in downtown day-trippers - City’s attractions are drawing fewer suburban visitors

* Technology replaces brawn in Ravenswood corridor

* Joffrey letter to dancers threatens to cut season: The drastic action — which constitutes a lockout not dissimilar to what the NFL is facing — is the result of an ongoing, unresolved contract negotiation between the ballet company and the dancers union, the American Guild of Musical Artists, which also represents major companies such as American Ballet Theatre in New York.

posted by Rich Miller
Tuesday, Jul 5, 11 @ 10:14 am

Comments

Re: the Joffrey letter. Classic tone deafness and idiocy by the union. That dance companies can survive in this economy is a miracle, that a dancer makes it into a company like the Joffrey is improbable, yet the union wants to throw it all away as it artificially limits rehearsal times. There are a thousand equally good dancers as any member of the Joffrey that would jete through a brick wall just for the chance to become a member of the company. They invent words like ‘incredulous’ for situations such as these.

Comment by walter sobchak Tuesday, Jul 5, 11 @ 10:30 am
Let’s compare that to what our small and medium size businesses are paying. I think that needs to be the follow up piece. What was the point of raising taxes if you’re going to exempt these multinationals?

Comment by Apple Tuesday, Jul 5, 11 @ 10:34 am
===There are a thousand equally good dancers===

You’ve apparently never been to the Joffrey.

Comment by Rich Miller Tuesday, Jul 5, 11 @ 10:34 am
And by that, I mean Joffrey dancers are in the world’s elite. To suggest that you could replace them with any old body is ridiculous. They aren’t street sweepers, they’re artists at the top of their profession.

And, just to make it clear, I’m a former season ticket holder, so I know whereof I speak.

Comment by Rich Miller Tuesday, Jul 5, 11 @ 10:41 am
I’ll side with Rich on this one- the Joffrey dancers are nothing short of top-notch. I interned there a decade ago (business office side, not artistic), and even then the shortened rehearsal weeks were an issue that was grumbled about. This is an issue the dancers need to give in on. In return, however, I would expect management to have to concede a slightly higher raise, perhaps around 4%. If this enables Joffrey to remain one of the world-class ballet companies (by attracting new choreographers and premieres), it would be a worthwhile trade-off for both sides.

However, if this impasse does cause a cancellation of the fall program, the financial fall-out will not be limited to lost ticket sales. Donors would eye extended labor unrest with a wary eye, and in the end both the company and the dancers would bear the price.

Comment by South Side Mike Tuesday, Jul 5, 11 @ 11:06 am
- “We have natural gas distribution pipes in the ground, and we can’t pick them up and move them to another state,” -

A few points, Integrys owns many utility companies in Michigan, Wisconsin, and Minnesota, they chose to purchase Peoples Gas and North Shore Gas. Also, companies that can pick up and move don’t sell a product that is guaranteed to be used by everyone with a guaranteed rate of return. I don’t feel terribly bad about their plight.

Comment by Small Town Liberal Tuesday, Jul 5, 11 @ 11:10 am
–Now more than two-thirds of Illinois corporations filing returns pay no income tax to the state, in some cases because they had no profits on in-state sales. In other cases, mom-and-pop business owners pay any profit to themselves as increased pay or a bonus, which then gets taxed at the lower, personal-income rate, said John Bennecke, managing director at True Partners Consulting.–

Finally, some facts to counter the mindless talking-point hysteria. I guess those 2/3 don’t see the corporate income tax structure as unbearable. Bad news for U-Haul, I guess.

Excellent article by the Tribbie reporters. The Edit Board must be staring daggers at them in the Tower today.

Comment by wordslinger Tuesday, Jul 5, 11 @ 11:12 am
Are there contract negotiations anywhere that go very well from the start? At least the ones that make the news, all seem to have sides that claim the other group is making unreasonable demands. In this case it would seem subscribers will simply wait it out or spend their money elsewhere.

On the tax issue, 100% of my income comes from within Illinois. If I worked equally long in 3 other states, I would expect 25% of my income would be taxed in Illinois. How are these companies different? Throw multi-national status and tax breaks in the mix and the final total shrinks.

Comment by zatoichi Tuesday, Jul 5, 11 @ 11:18 am
Ah, when in doubt, insult. As with most of your readers I will defer (usually) to your political knowledge but try not to extend it to the arts. The total number of fantastic dancers, singers, guitar players, actors, etc. far exceed the total number of professional opportunities. One would think, given the obscure musicians who have never made it that you showcase on this site, you would have some sense that this is true of dancers as well. Most dancers, many the equal of anyone dancing with the Joffrey today, never even get the chance to audition. It is the cruel unfairness of art. I was not criticizing the Joffrey’s dancers…they are at the top of their profession. I was criticizing the myopia of unionism, willing to destroy the company for an hour of rehearsal time.

Comment by walter sobchak Tuesday, Jul 5, 11 @ 11:26 am
It’s really hard for me to feel any sympathy for major corporations when their CEOs and others in top management are making millions in salaries and bonuses.

Comment by Wensicia Tuesday, Jul 5, 11 @ 11:47 am
Walter, an artist needs an almost insane level of ambition to make it to the elite. Success also requires choosing a style that fits with an existing taste or becomes popular (meaning luck). Most of the “obscure” musicians I highlight here are/were in it for the music, not the money nor the fame.

And, yes, there are obstacles to getting into a company like the Joffre. But some of those obstacles aren’t as significant as, say, a symphony, where members can play for decades. You can be the third-seat trombonist in the New York Philharmonic for 30 years while you wait for the first-seat trombonist to retire or die. Ballet dancers don’t last nearly that long.

Comment by Rich Miller Tuesday, Jul 5, 11 @ 11:58 am
Don’t worry, Rich, I saw ‘Black Swan.’ Most dancers are in it for the art. Even at the elite levels, unless you are a soloist, you are barely making a living. There might be more injury induced turnover to be found compared to a symphony orchestra, but, as I first wrote, there are a thousand wonderful dancers who would give anything just to have a chance to audition. And, unlike your friends who have a chance to play their music in a thousand bars and taverns, dancers can only perform their art in a company…and there are fewer and fewer companies around these days. One less, if the dancer’s union succeeds in destroying this year’s Joffrey season flexing their muscles.

Comment by walter sobchak Tuesday, Jul 5, 11 @ 12:12 pm
A thread on the fact that more than 2/3 of Illinois corporations pay no state income tax is dominated by a discussion on the finer points of the lives of the ballerinas, lol.

C’est la vie, say the old folks, goes to show you never can tell….

Comment by wordslinger Tuesday, Jul 5, 11 @ 12:18 pm
The tax code is broken along many many lines.

The best fix is to move away from taxing income/profits, and pick up your collections when purchases are made. Abolish fed and state income and go for a national use tax.

You tax people when they spend, so if they earn money from cash under the table, or large returns on stocks, you pick it up equally from all.

The system of carve outs and credits and differing tax rates has created a mess allowing some to artfully dodge, while others take the blow full on. That is the real problem.

Comment by Ghost Tuesday, Jul 5, 11 @ 12:24 pm
Due respect, Ghost, but a use tax still winds up sticking it to lower-income households disproportionately.

The richer folks don’t absolutely have to make many of the purchases they do, on top of the expenses that we all have to incur (i.e. food). And the wealthy can eat caviar or Cap’n Crunch, while the poorest don’t have such a wide range of choices. Bottom line: a use tax still treats the poor in a more straitjacketed way than the wealthy.

The best answer remains a progressive income income tax that finally chucks most of the escape-hatch, carve-out tax breaks accorded the well-to-do — the people who can afford to hire attorneys to find and take advantage of such loopholes.

Comment by Linus Tuesday, Jul 5, 11 @ 1:59 pm
The argument that “there are plenty of others willing to do the job for less, so shut up and be happy you have a job”, frames the issue the wrong way.

The issue is whether the company has the money to pay the employees but is holding back on account of greed.

With unemployment as high as it is, and with some jobs (like dancing for Joffrey) as prestigious as they are, there will always be people willing to take the job for less. One of the beauties of living in a union state is that the employee will be paid what he is worth, which is a different wage than the wage someone is willing to accept to do the work.

Comment by chi Tuesday, Jul 5, 11 @ 1:59 pm
I would prefer someone other besides the BND perform an unbiased look at what is really going on in work comp. The fact is permanency in IL work comp only mildly consideres a full duty release in your settlement/award. They are now saying the Arbitrator’s disregard studies from Harvard and Mayo. That is because the Commission has disregarded them because that is the law in Illinois.

Our recent amendments do not address these issues, yet the BND does not point out the fact these settlements are consistent with IL law and the legislature decided not to address the issue.

Most importantly, the articles are getting slanderous in nature, and not based on fact. I highly suggest doing your own research and not tying to this website if you want to remain credible.

Comment by the Patriot Tuesday, Jul 5, 11 @ 2:02 pm
Don’t worry, Rich, I saw ‘Black Swan.’

LOL. You now must know everything about ballet.

Comment by dave Tuesday, Jul 5, 11 @ 2:17 pm
I’m fascinated by this Trib story (and thoroughly amused by the conspicuous absence of the dozens of Armageddon-preaching usual suspects).

If more than 2/3 of Illinois corporations pay no state income tax, and the remainder pay far less than the statutory rate, why did Quinn and company take the “anti-business state” beating dished out by the WSJ, Fox, GOP, Daniels, Walker, Christie, et al?

In fact, why isn’t Illinois virtual lack of a corporate income tax front-and-center in marketing for new business? Why isn’t the Illinois Chamber of Commerce and Illinois Manufacturer’s Association screaming it from the rooftops?

Could the strange silence be that no one wanted the regular W-2 withholders to know?

Comment by wordslinger Tuesday, Jul 5, 11 @ 2:55 pm
===and thoroughly amused by the conspicuous absence of the dozens of Armageddon-preaching usual suspects===

Yeah. I second that emotion.

Comment by Rich Miller Tuesday, Jul 5, 11 @ 3:00 pm
Dave…it was a joke…a joke based on Rich’s comment about the ‘insane level of ambition’ top flight artists must have. Maybe a bit too heavy on the sarcasm meter but not to be taken seriously. I saw ‘Wag the Dog’ as well but don’t feel competent to comment on the Libyan imbroglio.

Comment by walter sobchak Tuesday, Jul 5, 11 @ 4:44 pm
Not at all surprised and it’s sick. (I am surprised the
conservative Trib actually covered this topic, yay Tribune!)

The corporations need to pay their fair share of taxes. They use public services and are like leeches or parasites on the people, sucking our dollars away from us and not paying their fair share.

Time for things to change.

Comment by chicagoan wanted to move out of IL Tuesday, Jul 5, 11 @ 7:52 pm
I’m very glad I boycott all big businesses, and getting the word out for others to do this also. We vote with our pocketbooks.

I support people and things I believe in and I’ll not be a blind consumer supporting these corrupt forces.

Comment by chicagoan wanted to move out of IL Tuesday, Jul 5, 11 @ 10:06 pm
Caterpillar?
No way.
I buy local/farmers good whenever possible. Want to join a co-op farm group actually.
Saying no to agribusiness feels great, Caterpillar leeches included.

Comment by chicagoan wanted to move out of IL Tuesday, Jul 5, 11 @ 10:08 pm