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* Subscribers were tipped to this bill earlier in the week. It passed the Senate Executive Committee yesterday and is now on the floor…
Illinois’ Senate leader wants to require publicly traded corporations operating in the state to disclose certain financial information, an idea Republicans and business groups criticized.
Senate President John Cullerton, D-Chicago, introduced the Corporate Disclosure and Responsibility Act on Wednesday and said the goal is to help the state and public evaluate the effectiveness and need for corporate tax breaks, such as the deal offered last year to the CME Group Inc. and Sears Holdings Corp., aimed at keeping them in Illinois.
“Publicly traded corporations already tell shareholders how their investments resulted in losses and profits,” Cullerton said. “The people of Illinois deserve the same transparency.” […]
Senate Minority leader Christine Radogno, R-Lemont, said it was “political gamesmanship” on the part of Cullerton and Senate Democrats, calling the measure “a cheap shot to the business community.”
* More…
As part of its economic development efforts, the state has awarded incentive packages to companies that agree to invest in the state and create jobs here, allowing them to take credits against their corporate income taxes. But since some companies pay no income taxes for a variety of reasons, the state has broadened some packages to allow them to retain a portion of the employee income taxes they withhold from paychecks.
“We are being asked to approve bills giving money to companies that apparently don’t pay (income) taxes,” Cullerton said. “It would be helpful to know what the situation is.”
* Cullerton made reference during the hearing to a similar Wisconsin law, but even before the hearing began some business lobsters were saying this was political payback to the Illinois Chamber…
But a source who would know says there’s another reason for the measure, perhaps the main reason. That would be the recent appearance by conservative GOP Gov. Scott Walker of Wisconsin at a Springfield luncheon sponsored by the Illinois Chamber of Commerce.
The appearance by a figure who has rankled organized labor in his state came as officials in this state are talking to unions about a pension-reform deal. So the timing was bad.
Moreover, it turns out, Wisconsin already has on its books a law that includes a portion of what Mr. Cullerton is proposing to do here.
Chamber chief Doug Whitley says he’s heard the same thing. And he sure isn’t happy about it.
“If it’s just a manner of having fun and sending a message I can understand that,” he emailed me. “But not only is it just totally unnecessary, it just sends off more warning bells” to companies that might want to set up shop here.
Adds Mr. Whitley: Mr. Cullerton takes “pleasure in reminding us” that things could be made worse for business in Illinois. And Mr. Whitley’s response: “Get over it, already.”
Others, however, said this bill was political cover for liberals who will have to make some tough budget and pension votes in the coming weeks. The same thing goes for the minimum wage bill that’s still pending in Senate Exec.
My bet is it’s a bit of both.
posted by Rich Miller
Thursday, May 10, 12 @ 11:50 am
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I’m not sure I understand what Cullerton is proposing, or why anyone is objecting, for that matter.
If they’re publicly traded companies, their annual and quarterly reports are easy enough to find. Many publicly traded companies post them on their websites.
Comment by wordslinger Thursday, May 10, 12 @ 12:01 pm
This is long overdue and good public policy.
How can we possibly judge whether corporations are paying an adequate amount of revenue to support the infrastructure of Illinois that allows them to be profitable if we don’t know how much they are paying in taxes?
The backstory to these atrocious Medicaid cuts is the lack of corporate revenue (and the lack of federal revenue now that the Tea Party is running the DC budget).
Getting some transparency in what corporations are actually paying is a smart, sensible move in crafting tax policy that makes sense for all parties. Much of corporate income tax law revolves around how much of the corporation’s activities are attributable to Illinois in order to tax that portion of the corporation’s income. Well, when we don’t know how much they pay in the other 49 states or the feds, how can we possibly make a reasonable or accurate determination? We’re just guessing.
Kudos to President Cullerton for a common-sense bill.
Comment by Dan Johnson Thursday, May 10, 12 @ 12:10 pm
Oh, and remember, the business community in Illinois largely means small businesses where all of their taxable income is attributable to Illinois. Publicly-traded companies doing business in Illinois do not represent the vast majority of the business community in our state. President Cullerton’s law will have no impact on the vast majority of businesses in Illinois (those small- and mid-market businesses that are not publicly-traded).
Comment by Dan Johnson Thursday, May 10, 12 @ 12:14 pm
I would say the Democrats in Illiinois are more of a problem for organized labor than Gov. Walker. I wonder how many more promises they can break to the unions.
Comment by Only in Illinois Thursday, May 10, 12 @ 12:14 pm
“Senate President John Cullerton, D-Chicago, introduced the Corporate Disclosure and Responsibility Act on Wednesday and said the goal is to help the state and public evaluate the effectiveness and need for corporate tax breaks, such as the deal offered last year to the CME Group Inc. and Sears Holdings Corp., aimed at keeping them in Illinois.”
God forbid large corporations should actually be held accountable to us when they want to take more room at the public trough.
Comment by Northsider Thursday, May 10, 12 @ 12:40 pm
So it’s okay to publish employee salaries on the web in the spirit of transparency but it’s not okay to disclose the fiscal realities of the large corporations that we are giving millions of dollars?
Comment by Irish Thursday, May 10, 12 @ 12:58 pm
Granted, I don’t entirely understand what’s the issue, but I don’t think publicly traded companies should have to disclose any more than that’s required by the federal government and that of non-publicly traded companies. Just cause they are large corporations, they are still entitled to some privacy. The overwhelming majority of publicly traded corporations are not cutting individual tax-break deals with the State — Cullerton makes it sound like lots of companies are making these deals with state leaders, when its just a handful. Perhaps these regulations should only apply to those seeking an individual tax break.
Comment by Just Observing Thursday, May 10, 12 @ 1:01 pm
What liberals? I see Democrats, not liberals. These terms are not interchangeable.
Comment by Cheryl44 Thursday, May 10, 12 @ 1:41 pm
Sounds like an interesting idea. However, I believe the bill would be greatly enhanced with an amendment that also require the Speaker of the House and the Senate President to disclose their tax returns as well.
Comment by Easy Thursday, May 10, 12 @ 2:12 pm
The easy solution would be not to provide corporations with this type of tax benefits. Once enacted, everyone then tries to game the system. It would make more sense to create an environment where businesses would want to locate in Illinois or hire employees here. No– we have to bribe businesses to do that . Which means here in Illinois that businesses have to bribe legislators with campaign contributions . And the vicious but rewarding circle continues at the expense of individual taxpayers.
Comment by Illinicpa2 Thursday, May 10, 12 @ 2:28 pm
This ‘proposal’ as written is just a flat out ignorant idea. Here’s why:
First off, federal rules on public corporations currently require detailed quarterly reporting, and comprehensive annual reporting. Requiring additional separate reports to the State of Illinois is just additional wasted paperwork that has absolutely no useful value, and drives businesses crazy. It’s a great contribution as to why the State of Illinois gets a bad reputation in terms of being ‘business friendly’.
Cullerton wants to pass something useful?
First, require each public corporation domiciled here in IL to put their annual 10-K report (current, and prior 3 years in full detail) accessible on their corporate website in a .pdf format, freely accessible at any time.
Second, require each public corporation domiciled here in IL to also publish on their website their quarterly reports to shareholders, and any financial projections officially issued by the business (like to Wall Street analysts). Same rules apply to these documents.
At that point, you have just done something that is really useful to shareholders (and other potential investors) not just in IL, but all over.
Transparency is a good thing - rank political stupidity is not.
Comment by Judgment Day Thursday, May 10, 12 @ 2:32 pm
Publicly traded companies file an annual report with the SEC, Form 10-K, that is chock full of tax information. There may be some value in getting a cheat sheet specific to Illinois taxes and Illinois tax breaks.
For the examples cited above, the Forms 10-K show:
The very successful CME reported paying state income taxes of $149 million in 2010, $127 million in 2009 and $93 million in 2008. Perhaps not all of that was paid to Illinois, but if I recall last winter’s debate, it seems the vast majority was.
The not-so-successful Sears Holding reported paying state income tax of exactly $0 in 2010, received a $7 million refund in 2009 and paid $14 million in 2008.
Comment by wordslinger Thursday, May 10, 12 @ 2:43 pm
“There may be some value in getting a cheat sheet specific to Illinois taxes and Illinois tax breaks.”
So if I’m say, PetSmart & I locate a regional distribution center in say, Ottawa, IL and I’m getting both state and local tax breaks for bring in 100’s of jobs into IL, so now the business gets to fill out tons and tons of annual paperwork on an array of tax breaks (State, different Enterprise Zone abatements, sales tax breaks for construction, etc.).
Your ‘cheat sheet’ can easily grow into a monster. And don’t think for a minute that this stupid idea won’t get used against us by other states proclaiming how ‘business unfriendly’ Illinois is - even if it doesn’t go anywhere.
It’s just one more reason to view Illinois negatively from a business development standpoint….
What are these people thinking of….
Comment by Judgment Day Thursday, May 10, 12 @ 3:21 pm
@ Dan Johson
If this is such great policy, then why limit it to publicly traded companies? Why did Cullerton specifically exempt law firms, accounting firms, and investment companies like Goldman Sachs?
If it’s REALLY about public policy, since the majority of businesses are not publicly traded, by your logic we should require every business to disclose because you can’t make policy based on looking a less than 1 percent of companies.
Corporations according to the Comptroller get a total of $350 million in tax incentives while individuals get more than $6 billion. Therefore, we should require every person to publicly show their tax return. After all, should the billionaire trader or millionaire state lawmakers get a tax break just like the single mom making $50,000?
Comment by 1776 Thursday, May 10, 12 @ 3:50 pm
Wordslinger, as I recall the debate, CME never said what percentage of their tax was paid to Illinois. We just don’t know. And because no (or few?) states have this type of disclosure, no one knows.
1776, I don’t see those specific exemptions you mention in the bill. The issue is largely when multi-national companies (or at least multi-state companies) don’t disclose the percentage of their income is attributable to Illinois. It’s supposed to work out where 100% of the domestic tax liability of a company gets apportioned among the states, but in practice, it doesn’t work out that way, because it isn’t public. Instead, corporations are dodging their responsibility to pay state income tax because they undercut each of the states, claiming that the percentage of income attributable to each state is less than what it ought to be. If we knew what each company attributed to each state of their income, we could check that it added up to 100%. Since we don’t know, we can’t check.
That, at least, is how I understand this part of corporate tax policy and the institutional shortcomings of confidential tax returns. And that’s a big part of the reason why we have a structure deficit.
Comment by Dan Johnson Thursday, May 10, 12 @ 4:13 pm
Dan, last November Duffy said CME paid $108 million in Illinois corporate income taxes in 2010. Their annual reports states CME paid a total of $148 in state income taxes 2010, so better than 2/3 was here.
Comment by wordslinger Thursday, May 10, 12 @ 4:24 pm
I’m the last guy to defend the business sector, but it seems to me that the reasonable solution is to revise and strengthen the Corporate Accountability for Tax Expenditures Act, created in 2003.
That would require further disclosure through DCEO from all corporations - public or private - that receive tax breaks, while leaving the rest alone. And, I believe it includes recipients of local property tax breaks as well…but if it doesn’t it could.
The Chamber opposed the initial Act, but I think they’re hard pressed to win over even the Tribune editorial board on this point.
Comment by Yellow Dog Democrat Thursday, May 10, 12 @ 4:38 pm
=== Political cover or political payback? ===
Um…good public policy, just needs some fine-tuning?
Comment by Yellow Dog Democrat Thursday, May 10, 12 @ 4:39 pm