sugary drink tax

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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Chicago Alderman Proposes Residents And Businesses Pay ‘Safety And Security Fee’ To Hire More Police

Many Chicagoans will be wondering what they’re paying taxes for after hearing about a proposed “fee” to hire more police officers. Fran Spielman wrote on the Chicago Sun-Times website this morning:

Chicago should impose a “safety and security fee” — as high as $5 a month on homes and businesses — to generate the $70 million needed to hire 700 additional police officers, an influential alderman said Thursday.

Ald. George Cardenas (12th), chairman of the City Council’s Health Committee, said Chicago desperately needs a surge in police hiring to ease a severe manpower shortage that has hamstrung the city’s ability to stop a surge in homicides and shootings.

If a $5 “safety and security fee” was tacked on to the monthly electric bill of Commonwealth Edison’s one million residential and 170,000 business customers and remitted to the city, it would generate the $70 million needed to bolster the force by 700 officers and bolster community policing, Cardenas said.

Chicago residents may already be familiar with Alderman Cardenas because of his proposed taxes on bottled water and sugary drinks.

According to Susanna Song on the website of Chicago CBS affiliate Channel 2 this morning:

Chicago Fraternal Order of Police President Mike Shields praised the idea, and said the police force is suffering from a critical manpower shortage that is getting worse.

“The attrition rate over the last 3 1/2 years has been about 4.5 to 1, so about 4.5 officers who retired for every one officer who is hired,” Shield said. “The crime rate is going up. The manpower is going down.”

Murders are up 24.5 percent and shootings are up 10 percent compared to this time last year.

Sources:

Spielman, Fran. “Alderman proposes $5-a-month ‘safety and security fee’ to pay for 700 more cops.” Chicago Sun-Times. 21 Sep. 2012. (http://www.suntimes.com/15277823-761/alderman-proposes-5-a-month-safety-and-security-fee-to-pay-for-700-more-cops.html). 21 Sep. 2012.

Song, Susanna. “Alderman Wants Fee On Electric Bills To Fund Hiring Of New Police Officers.” Channel 2 Chicago. 21 Sep. 2012. (http://chicago.cbslocal.com/2012/09/21/report-alderman-wants-fee-on-electric-bills-to-fund-hiring-of-new-police-officers/). 21 Sep. 2012.

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Friday, September 21st, 2012 Crime, Employment, Government, Public Safety, Taxes 1 Comment
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