“Thirteen area companies say they may cut more than 1,100 jobs in the near future, according to the state’s Worker Adjustment and Retraining Notification (WARN) Act report for February.”
-Chicago Tribune, March 5, 2013
Yesterday, Illinois Governor Pat Quinn proposed a $62.4 billion budget for the State of Illinois in 2014. Ray Long reported on the Chicago Tribune website Wednesday:
Quinn also proposed whittling down the state’s $10 billion backlog of unpaid bills by closing what he calls corporate tax loopholes, a move that business groups say amounts to tax hikes on them. Quinn suggested suspending three so-called loopholes that bring in $445 million a year: the federal production activities break, the non-combination rule and the foreign divided allowance.
(Editor’s note: Italics added for emphasis)
From a transcript of the governor’s budget address to the Illinois General Assembly:
Over the next 12 weeks, we should work together to enact legislation that suspends unnecessary corporate tax loopholes and dedicates the resulting revenue to a new Bill Payment Trust Fund.
For example, we should suspend the Foreign Dividend corporate loophole. We should also join other states that have decoupled from the Federal Production Activities loophole. And we should suspend the Non-Combination Rule that allows big corporations to shift their income to locations outside Illinois. Together, these three loopholes alone cost our treasury about $445 million per year.
Suspending corporate loopholes like these until the bills are paid will be good for our vendors and good for our economy.
You know what’s “good for our vendors and good for our economy?” Legislators in Springfield not spending taxpayers’ hard-earned money like drunken sailors. Illinois, like Uncle Sam, has a debilitating spending problem. If the state didn’t spend so much, it might be able to afford to pay its vendors.
Governor Quinn added in his budget address:
Why should we give costly, ineffective loopholes to some of the biggest and most profitable corporations on earth, when we have bills to pay?
Maybe because the jobs these corporations provide are desperately-needed by your constituents? The state’s “official” unemployment rate was 8.6 percent at the end of last year, significantly above the national rate. These days, the “Land of Lincoln” is fast-acquiring a reputation for being bad for business (raising corporate income taxes 46 percent at the beginning of 2011 can have that effect), with our neighbors only too happy to poach companies looking to move to this part of the Midwest or in the start-up phase. And with the businesses go the jobs.
Does it really make sense to pursue “a move that business groups say amounts to tax hikes on them” in light of all this?
After all, if these loopholes are really so evil and detrimental to the State’s bottom line, why would the Governor propose to suspend them only “until the bills are paid?”
Rather than becoming even more business-unfriendly, the State of Illinois, its vendors, and its constituents are better served by a reinvigorated program that attracts, grows, and retains business here. Financial incentives will almost certainly play a role in this initiative. And with the businesses now come the jobs. Along with the tax revenue to pay off our “tab” from all that drunken spending over the years.
Keep on antagonizing the private sector, and the state will continue on its present course of becoming one giant ghetto smack dab in the middle of the Midwest.
You can read Governor Quinn’s entire 2014 budget address here.
By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)
Long, Ray. “Quinn blames lawmakers for inaction on pension reform.” Chicago Tribune. 6 Mar. 2013. (http://www.chicagotribune.com/news/politics/clout/chi-quinn-blames-lawmakers-for-inaction-on-pension-reform-20130306,0,971611.story). 6 Mar. 2013.
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