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Madigan Proposes Major Corporate Tax Cut
Democratic House Speaker Mike Madigan has proposed slashing the state's corporate income tax, from 7 percent to just 3.5 percent.
According to his office, the idea is to help Illinois attract and retain businesses, and give business owners money to invest back into the state's economy.
"I think that would be a great thing to try to keep businesses in Illinois," says Tony Kulavic, owner of Kulavic's Autobody in Springfield. "Seems like a lot of the time they're leaving Illinois just because of the corporate
And Kulavic is excited for what that type of tax break could mean for his business.
"I think if we kept more money in pocket, that we would be able to reinvest it in the business, employees, upgrading equipment, whatever it might be," Kulavic said.
According to Steve Brown, spokesman for Madigan, there would be a lot of cash statewide for businesses to invest.
"Well the savings to business would be about $700 million in FY14," said Brown. "And about a billion and a half in savings to business in FY15."
If passed by lawmakers and signed into law, the bill would kick in halfway through the state's current fiscal year. That's the reason for the difference in savings between years.
But Madigan's office doesn't believe it would leave a massive hole in the budget.
"I think if you look at what happens in other states, and what is likely to happen here, that the moneys that might be lost in terms of tax rate and the existing number of employers will be offset by growth in terms of employers and employee wages," Brown said.
Brown says the idea is a more fair, across-the-board way of attracting and retaining businesses, versus giveaways for select big companies.
But Kim Clarke Maisch of the National Federation of Independent Businesses tells us that doesn't mean it helps all companies.
"About 75 percent of small business owners are not corporations," said Maisch. "They are what they call pass-through entities, so they actually pay at the personal income tax level. So unfortunately in this proposal, the tax relief is not going to get to small business owners, and of course they're really the job creators in this state."
Both the corporate and individual income tax rates are set to begin to expire next year. Brown tells us the Speaker feels that is a separate issue. He tells us those tax questions will be taken as part of the budget debate. And for those who want to see the hike expire?
"Well hopefully they'll come forward with their idea for what programs they want to cut, and what taxes they want to force on local governments or schools or what have you," Brown said. "That's sort of two separate issues in our view."