No Need For Gross Receipts Tax, Corporate Tax Revenues Up 14.3%
CHICAGO-Governor Rod Blagojevich’s proposed new tax on gross receipts is floating on a raft of deceptions, half-truths and hidden future tax increases, charged Jim Tobin, president National Taxpayers United of Illinois (NTUI), Illinois’ largest taxpayer organization. “This proposed new tax will make Illinois uncompetitive with other states, drive many businesses bankrupt, and result in higher costs for Illinois consumers,” said Tobin. “But that’s just the beginning. Illinois corporations will be socked with higher taxes in the future, and that’s not being told to taxpayers or the media.”
“First of all, the total Illinois corporate income tax isn’t being replaced, as stated by the governor. Only a part of the tax would be eliminated. The total corporate income tax rate is 7.3%, not 4.8%, and his plan would only reduce the 7.3% rate to 2.5%. Furthermore, the remaining 2.5%, deviously called the ‘personal property replacement tax’ because it supposedly replaced the personal property tax-a tax that wasn’t being collected-can’t be cut or eliminated by the General Assembly, because it was put in effect by constitutional amendment and can be cut or eliminated only by constitutional amendment.”
Revenues from the corporate income tax totaled just over $3 billion in fiscal year 2006, $1.8 billion from the 4.8% portion of the corporate income tax, and $1.2 billion from the oft forgotten 2.5% personal property replacement income tax portion. Through the first 8 months of fiscal year 2007, total corporate tax revenues are up by $186 million, or 14.3% above the same period in fiscal year 2006. The increase in total corporate tax revenues includes an increase of $123 million (15.8%) for the 4.8% corporate income tax, and $63 million (12.1%) for the 2.5% personal property replacement tax. The state is on pace to see corporate tax revenues increase by $430 million this year.
“The proposed new tax on gross receipts, reportedly to be created initially at a ‘low’ rate, will eventually have to be raised in order to cover the state’s out-of-control spending. That’s what happened to the state’s sales tax, and it will happen to the gross receipts tax. The ‘low’ state sales tax created in the 1930s, at ½ percent, has soared to its current rate of 6.25 percent. The gross receipts tax assuredly will not stay low for long.”
“The governor is proposing a huge tax increase for a state that already has one of the highest tax burdens in the country. Illinois corporations and individual taxpayers have been bludgeoned enough by high taxes to fund overpaid government employees and pork barrel spending. This proposed gross receipts tax will drive our best corporations out of state, and bankrupt those with thin profit margins.”