By Andrew Thomason | Illinois Statehouse News
SPRINGFIELD — A $250-million makeshift combination of tax breaks for businesses and tax relief for the low- to moderate-income families is positioned to come up for a vote in the Illinois House on Tuesday.
The Illinois House Revenue and Finance Committee on Monday approved the legislation, which is a trimmed down version of an earlier plan aimed at calming some of the state’s biggest businesses who are upset over a corporate income tax rate hike of 47 percent this year.
The most sweeping changes are its costs — estimates for the previous plan pegged its yearly cost at upward of $800 million in tax revenue — and its funding source.
The tax breaks will be funded by letting a provision in the tax code expire on Dec. 31. That provision allows a business to claim a tax credit for the full depreciation of a capital investment, like equipment, all at once instead of over the lifetime of the investment.
That will give the state upward of $250 million more in tax revenue annually, making the tax breaks a wash on paper, said state Rep. John Bradley, D-Marrion, who is sponsoring the legislation in the Illinois House.
The cost and funding source of the plan might have shifted over the past several weeks, but the heart of the measure remains.
CME Group, which owns the Chicago Board of Trade and the Chicago Mercantile Exchange, and national retail company Sears Corp. have threatened to leave the state, if the Legislature doesn’t make the cost of doing business in the state cheaper, and spawned the original push to make tax changes before Dec. 31.
State Rep. Barbara Flynn Currie, D-Chicago, likened CME Group’s and Sears’ threats to assault with a deadly weapon.
“We’re here today, because there are two companies in the state of Illinois that are essentially holding a gun to our heads,” Currie said.
Under the current House proposal, CME Group still would see annual tax savings of about $85 million, the single largest benefit outlined in the package.
Sears would get a tax break of $15 million annually over the next decade, as long as it keeps its headquarters and 4,250 employees in Hoffman Estates. Sears employees about 6,100 people at its corporate headquarters outside of Chicago.
CME Group alone was responsible for 6 percent of all the state’s corporate income tax before the corporate income tax moved from 4.8 percent to 7 percent last year. With the tax increase, CME Group will pay more than $150 million this year in corporate income taxes.
Bradley and state Rep. David Harris, R-Arlington Heights, who worked to hammer out the deal, said nothing prevents another large business from threatening to leave if another state offers a better tax deal.
“That is an ongoing issue that the (Illinois) Revenue and Finance Committee is trying to tackle. We haven’t come up with a good solution for that yet. Part of the problem is that as long as other states do the same thing, were going to continue to have a problem,” Bradley said.
Small- and medium-sized businesses that can’t afford to leave the state will get some tax relief in the package, said Harris and Bradley.
All businesses could claim up to $100,000 in a tax credits if expenses outstrip revenue during a tax year, something known as net operating losses, under the current plan.
The previous plan would have reinstated the net operating tax credits at a cost of $275 million annually.
The ability to claim net operating loss credits was suspended temporarily at the same time the income tax was increased to help the state deal with its troubled finances. Claiming net operating losses of no more than $100,000 means a lot more to a mom-and-pop business on Main Street than a conglomeration worth millions of dollars, Harris said.
Organizations that represent businesses of all stripes that questioned the intention of the previous legislation now support its current incarnation.
Both the Illinois Chamber of Commerce, the largest businesses lobbying group in the state, and the Illinois Manufacturing Association, which represents manufacturing businesses, testified for the current plan Monday because of its tax breaks for small businesses.
They were especially supportive of the move to extend a research and development tax credit for another five years.
Beyond businesses, there’s an attempt to offer some tax relief to individuals whose personal income taxes jumped by 66 percent in January.
The state’s earned income tax credit for low- to moderate-income families would go from 5 percent of federal earned income tax credit to 7.5 percent under the plan. That translates into a maximum tax credit of $283 to $424.50.
This would cost the state about $55 million every year, said Bradley.
The original measure tripled the state’s earned income tax credit at a cost of $112 million, according to the Illinois Department of Revenue.
Additionally, the standard tax deduction for individuals would go from $2,000 to $2,050.
David Vaught, director of Gov. Pat Quinn’s Office of Management and Budget, said Quinn supports the spirit of the measure, but he wants more tax relief for individual taxpayers before signing any legislation.
Originally reported by Illinois Statehouse News. Read the original article here.
Scaled back tax break plan emerges | Chicago Press Release Services – Chicago’s leading press release newswire service; professional press release services, press release distribution and newswire services.
Press release distribution via Chicago Press Release Services