Illinois business

Amended Illinois Tax Hike Plan To Hit Taxpayers, Businesses, And Employment?

Back on January 16 I published a post on Survival And Prosperity entitled “Illinois ‘Grand Bargain’ Legislation Includes 32 Percent Personal Income Tax Hike.” I started the piece with:

Illinois taxpayers may get hit with a significant income tax hike pretty soon…

Yesterday morning, I learned the potential “hit” could be a “combination of punches” directred at taxpayers, businesses, and employment.

From the Greg Hinz On Politics blog on the website of Crain’s Chicago Business:

There’s still no word on when lawmakers are going to vote on it, but an amended tax-hike plan has been introduced in the state capital.

It’s a doozy, with an even higher income tax, a limited service tax and a sort of minimum tax on business. But the soda pop levy is gone, as are a couple of those corporate loophole closings that business groups didn’t like…

The highlights:

The Individual income tax would go to 4.99 percent from the current 3.75 percent, and the corporate income tax to 7 percent from 5.25 percent. Combined, that would pull in about an additional $5 billion a year.

A new “business opportunity tax” ranging from a fee of $225 to $15,000 a year would be imposed, based on payroll. The intent is to make sure that all companies pay something, whether they are profitable or not. The state’s net on this is an estimated $750 million a year.

However, the research and development tax credit would be made permanent and the manufacturers purchase and graphics arts credits would be combined, as some businesses wanted.

A service tax—extension of the sales tax—would be imposed on certain items including repair and maintenance of personal property, use of amusement services including gyms, landscaping, laundry and dry-cleaning, and storage of personal goods such as cars and property. This would pull in a projected $400 million a year.

The telecom excise tax would be extended to cable and satellite services.

Both Radogno and Cullerton are said to have negotiated and support the above, pending action on the rest of the package…

Hinz does a good job summarizing the proposed expanded revenue grab. At this point, I want to go back to that bit about a new “business opportunity tax.” From the actual legislation for the so-called “Business Opportunity Tax Act”:

Section 1-10. Tax imposed.
(a) Beginning on July 1, 2017, a tax is hereby imposed upon each qualified business for the privilege of doing business in the State.
(b) The tax under subsection (a) shall be imposed in the following amounts:
(1) if the taxpayer’s total Illinois payroll for the taxable year is less than $100,000, then then annual tax is $225;
(2) if the taxpayer’s total Illinois payroll for the taxable year is $100,000 or more but less than $250,000, then the annual tax is $750;
(3) if the taxpayer’s total Illinois payroll for the taxable year is $250,000 or more but less than $500,000, then the annual tax is $3,750;
(4) if the taxpayer’s total Illinois payroll for the taxable year is $500,000 or more but less than $1,500,000, then the annual tax is $7,500; and
(5) if the taxpayer’s total Illinois payroll for the taxable year is $1,500,000 or more, then the annual tax is $15,000…

I can see a number of existing and prospective Illinois business owners having concerns with the proposed “Business Opportunity Tax Act.”

First, Illinois already has poor business reputation. For example, early last year Chief Executive magazine asked 513 CEOs to rank states they are familiar with on the friendliness of their tax and regulatory regime, workforce quality, and living environment. The “Land of Lincoln” came in as the 48th worst state in this annual survey, beaten only by New York and California in that order. The “Business Opportunity Tax Act” has the real potential of increasing the perception that Illinois is business-unfriendly.

Second, if my understanding of the legislation is correct, the larger the payroll an Illinois business has, the more taxes they will pay. Consider the following. If I’m an Illinois business owner with a payroll just shy of $250K who would like to bring on more staff, I may be dissuaded from doing so to avoid forking over an additional $3,000 to the state (unless I’m convinced the hiring would offset the $3K hit). And how might employee raises be impacted once payrolls start approaching a higher tax bracket? The proposed “Business Opportunity Tax Act” may not be too terrific for Illinois employment.

Third, readers of this blog may know that I am in the process of rolling out a research business focusing on specialized asset protection. It’s been my intention to launch in the Chicago area. Lately, however, I’ve been thninking of opening up shop in southeast Wisconsin (where my family has a residence) due to the direction Illinois looks to be heading with taxes and its treatment of the business community. The passage of the “Business Opportunity Tax Act” could be the straw that breaks the camel’s back. I wonder how many other prospective Illinois business owners might be in the same boat?

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Hinz, Greg. “New, wider tax plan rolls out in Springfield.” Greg Hinz On Politics. 24 Jan. 2017. (http://www.chicagobusiness.com/article/20170124/BLOGS02/170129931/springfield-lawmakers-roll-out-new-wider-tax-hike-plan). 26 Jan. 2017.

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Thursday, January 26th, 2017 Business, Employment, Fiscal Policy, Government, Political Parties, Taxes Comments Off on Amended Illinois Tax Hike Plan To Hit Taxpayers, Businesses, And Employment?

Farewell, Illinois Businesses And Jobs

One topic I particularly “harp on” in Survival And Prosperity is the continued erosion of business-friendly conditions in the state of Illinois.

Whether it be a misguided anti-Constitution, anti-Bill of Rights crusade that drives off gun manufacturers and their workers or a 46 percent corporate income tax hike that was implemented at the beginning of 2011, parochial-minded politicians in control of the state are scaring away prospective and existing businesses and jobs.

Thankfully, it’s not just me that recognizes the nonsense that’s going on. From my Sunday paper this morning:

Scott Stantis
Chicago Tribune
Oct 19, 2013
ANY CHARACTER HERE

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Sunday, October 20th, 2013 Business, Employment, Firearms, Fiscal Policy, Government, Gun Rights, Political Parties, Taxes Comments Off on Farewell, Illinois Businesses And Jobs

Illinois Gun Maker Leaving State

Another business is leaving Illinois.

Big whip. That’s going on all the time these days in the anti-business climate the state’s political leaders have created.

But in this instance, it’s a well-known gun manufacturer- the second one that’s thrown in the towel on the “Land of Lincoln” in the last five years.

Enter Lewis Machine & Tool Company, or LMT. From their website:

Lewis Machine & Tool Company (LMT) was founded in 1980 to provide the US Military, law enforcement and government agencies with precision engineered, high quality weapons, components and modular weapon systems.

Milan, Illinois-based Lewis is internationally-known for its flagship .308 Sharpshooter rifle, which the British military adopted in 2010. In fact, this Royal Air Force used Sharpshooters to protect the 2012 Olympics in London, England, against potential terrorist attacks.

And now, the expanding company looks to be departing Illinois for Davenport, Iowa. Stephen Elliott reported on the Quad-Cities Online (Moline Dispatch/Rock Island Argus) website last Thursday:

A longtime Milan-based gun manufacturer announced plans Thursday to move his 170-employee operation to Davenport.

During a city enterprise zone commission meeting, Karl Lewis, owner of Lewis Machine and Tool Co., said he plans to build a 60,000-square-foot building on Kimmel Drive. The board unanimously approved Mr. Lewis’ plans.

If those plans come to fruition, Lewis Machine and Tool will be the second gun manufacturer to move across the river in the past five years. In 2008, Les Baer Customs moved its operations and two dozen workers to a new 18,000-square-foot building.

“I would hope, if everything lines up as it should, that sometime in 2014 we’ll make the formal move,” Mr. Lewis said. “The sooner, the better.”

Elliott added later in the piece:

Milan Mayor Duane Dawson on Thursday said city officials were aware of Mr. Lewis seeking more space.

“As I understand it, they need more space, and there is also a concern with the Illinois gun laws,” Mayor Dawson said. “There’s only so much we can do with where they are.

(Editor’s note: Italics added for emphasis)

Shane Simmons contributed the following over on the website of WQAD 8 (Quad Cities) Friday evening:

Mayor Dawson believes the Illinois business climate makes it hard to keep the businesses that are present.

“We here in Illinois have fought this for quite some time about attracting businesses”, he continued, “It’s very difficult to get manufacturers to come to this state.”

In Illinois, income tax is higher, which is a burden on business owners.

Local officials like Mayor Dawson hope to see change in the Illinois business culture.

(Editor’s note: Italics added for emphasis)

So would I, Mayor Dawson. So would I.


“Illinois Gun Maker Plans Move”
WQAD 8 Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Elliott, Stephen. “Milan gun-maker plans move to Davenport.” Quad-Cities Online. 18 Sep. 2013. (http://qconline.com/archives/qco/display.php?id=653224). 24 Sep. 2013.

Simmons, Shane. “Illinois Gun Maker Plans Move.” WQAD 8. 20 Sep. 2013. (http://wqad.com/2013/09/20/illinois-gun-maker-plans-move/). 24 Sep. 2013.

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Tuesday, September 24th, 2013 Business, Employment, Europe, Firearms, Government, Gun Rights, Manufacturing, Military, Public Safety, Taxes Comments Off on Illinois Gun Maker Leaving State

Illinois Governor Pat Quinn Proposes Highest Minimum Wage In The U.S.

Fall 1986. I was hanging out with my older sister in her bedroom when I came across a binder for some basic economics/personal finance class that she was enrolled in at the local public high school. As I leafed through it, I thought, “This is some pretty cool stuff- I hope I get the chance to take a class like this when I’m in high school next year.” I didn’t. Not in my freshmen year or any other year. I ended up at an all-boys Roman Catholic college preparatory high school, where such material just wasn’t taught.

Latin, yes. Economics/personal finance, no.

Ita sit (so be it).

In fact, Illinois Governor Pat Quinn also attended the same school. Both of us might have been able to benefit greatly from such instruction early on.

Perhaps one more than the other, based on a new minimum wage hike the Chicago Democrat proposed yesterday in his “State of the State” address. From Paul Merrion on the Crain’s Chicago Business website yesterday:

Gov. Pat Quinn’s call for a $10 minimum wage has created yet another firestorm for the state’s business community.

While economists question whether higher minimum wages hurt jobs and make some states less competitive than others, Illinois business leaders view the governor’s proposal as one more blow to the state’s battered business climate.

Illinois already has the fourth-highest minimum wage at $8.25 an hour, and raising it more than 21 percent over four years would put it far above Indiana or other neighboring states eager to attract Illinois companies to relocate.

According to Merrion, a minimum wage of $10 would be the highest in the country.

Supporters of Quinn’s minimum wage hike are calling it “pro-worker.”

Whether or not “higher minimum wages hurt jobs” directly, a higher wage, in conjunction with the state’s huge fiscal mess and recent (January 2011) corporate income tax rate hike of 46 percent, might be the last straw for Illinois companies contemplating leaving the state and kill the formation of new businesses here. By itself, the effects of the hike may not be significant. But taking everything else into consideration, the growing belief that Illinois is “anti-business” will probably be magnified by its implementation, and jobs could be impacted as a result.

Pro-worker? What good’s a minimum wage hike if jobs leave the state and new ones aren’t created?

Economics 101, my man. Economics 101.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Merrion, Paul. “Quinn’s call for $10 minimum wage riles business.” Crain’s Chicago Business. 6 Feb 2013. (http://www.chicagobusiness.com/article/20130206/NEWS02/130209864/quinns-call-for-10-minimum-wage-riles-business). 7 Feb. 2013.

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Survival And Prosperity
Est. 2010, Chicagoland, USA
Christopher E. Hill, Editor

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