FEATURED: Closing Corporate Tax Loopholes
Illinois is broke
Illinois can’t afford to fix its crumbling infrastructure. The state has cut $1.6 billion in Medicaid coverage for the elderly, the disabled and poor parents and children. Chicago Public Schools is threatening to close 129 schools. Illinois has drastically underfunded pension programs for life-long state employees. (They are NOT eligible for Social Security.) These examples are just the tip of the iceberg of the pain ordinary people will feel as the state makes cuts.
But Illinois doesn’t have to be broke.
Two –Thirds of Corporations Pay No Income Tax to Illinois!
Eighty-one percent (81%) of Illinois’ revenue comes from the payment of income taxes by people like you and me and by the collection of sales taxes on the goods we purchase. ONLY 8% of Illinois’ revenue comes from corporate income tax payments.
Because 2/3 of corporations pay no Illinois income tax, working people must pay higher taxes and our children, the elderly, the disabled and our state employees must bear the burden of cuts to education, healthcare and retirement security.
If corporations simply paid their fair share of taxes, the rest of us won’t have to accept these cuts – which really amount to the state refusing to meet its obligations and to invest in the common good.
Tax Transparency Legislation is the First Step
Tax transparency legislation passed the Illinois Senate in November with strong support for Senate President Cullerton, but was killed in the House Revenue Committee because 2 of 5 Democrats voted against the bill.
These Democrats voted AGAINST corporate tax transparency in Illinois:
Michael Zalewski of the 21st District – near southwest side of Chicago into parts of Cicero, Berwyn, Stickney, Forest View, Lyons and Summit
Frank Mautino of the 76th District – centered around Peru and LaSalle on I-80
Why would Democrats vote against a simple corporate tax transparency bill?
We have Democratic super-majority in Illinois, but our legislators believe cuts are the only solution to our budget crisis. House Democrats killed a simple corporate tax transparency bill because:
- Corporate campaign donations funneled through House Speaker Michael Madigan’s offices are used to elect Democrats throughout the state AND
- The corporate lobbies like the Chamber of Commerce and the Illinois Manufacturers Association came out very strongly against this legislation.
The people of Illinois know that our system is broken. A poll by Public Policy Polling, a respected, non-partisan polling firm found that:
Nearly 80% of Illinois voters say legislation to require publicly-traded corporations to disclose how much they pay in Illinois corporate income tax is a good idea—with 75% of Republicans, 80% of Democrats and 84% of Independents saying it is a good idea—according to the survey.
In addition the poll showed that:
- 66% of voters think it hurts the state’s economy that two-thirds of Illinois corporations pay no Illinois corporate income tax—including nearly 60% of Republicans;
- 68% of voters—including 58% of Republicans—say the division of taxes in our state is unfair because corporations don’t pay enough taxes;
- 65% of voters think our state would be in better shape if some state corporate tax loopholes were closed—including 60% of Republicans;
- 70% of voters think most Illinois politicians put the interests of large corporations and their lobbyists ahead of the interests of the people in their district—including 71% of Republicans.
IIRON will be tackling corporate loopholes head-on in the Spring legislative session.
Loopholes we’re exploring closing:
1. Decoupling from two Federal Tax Policies that allow corporations to claim tax credits for a broad range of “production activities” and to deduct the expense of new machinery and equipment from tax payments in the first year rather than over the life of the equipment. Many states have decoupled from these tax policies. If Illinois “decouples” we could generate over $400 million per year.
2. Eliminating the Vendor Discount, the state permits retailers to keep 1.75% of the sales tax we pay. This made sense when retailers had to employ people to make these calculations and remit payment to the state by hand, but in the era of computers it makes no sense. $115 million per year
3. Closing a tax exemption for off-shore drilling. $75 million per year
That’s more than $1.5 billion in NEW revenue over a 3 year period!