Corporate tax hike would do more harm than good
The biggest problem with the proposed tax hikes in Illinois is flying under the radar.
The stealth bomb in the proposed tax increases from Gov. J. B. Pritzker is his call to raise the corporate income tax from 7 to 7.95 percent. Corporate taxes are hard to figure because different states tax in different ways, but it would appear Illinois’ overall tax on business now will be the third highest in the nation — behind only Pennsylvania and Minnesota. If you are doing business in a border county in Illinois, you almost certainly will save yourself money by taking you, your business and your employees across the border.
Pritzker’s plan earned swift condemnation from the Illinois Manufacturers Association and the National Federation of Independent Businesses.
This is a particularly tone deaf time, too, to raise business taxes. The economy, true enough, is booming, but it is not booming for everyone. Retail businesses are closing. A quick scan of recent headlines shows stores such as Sears, Carsons, Family Dollar and Payless Shoes, among others, either closing, planning closing or considering closing.
They are being driven out by internet shoppers. When a local store closes, it produces zero sales tax income, employs no one and makes no charitable contributions. Our guess is that the proposed business tax increase will be a tipping point for some small franchise owners.
It’s easy to say “tax business.” But there is a point of killing the goose that lays the golden eggs.
A better proposal would be to move into the uncharted waters of placing sales taxes on internet sales. That would help level the playing field — and save local jobs.
There are many problems with this taxing proposal, but the hike in corporate taxes might be the biggest.