"Illinois' corporate income tax system is littered with loopholes
that allow big business to escape paying their fair share for health
care, education and other services that government is expected to
provide," Blagojevich said. "As a result, our schools are
underfunded, millions lack access to quality, affordable health
coverage and the burden on working people is at a breaking point. We
can and should help Illinois families get relief and make sure our
kids are getting the best education possible -- and we can and
should do it without asking those same families to pay even more in
The legislation would give the state a solid, dependable revenue
stream moving forward to "invest in families" with $7.6 billion that
Helping Kids Learn -- a record new investment of $10 billion in
schools over the next four years -- nearly three times bigger than
any increase in state history.
Illinois Covered -- an affordable, reliable health care plan to
cover the 1.4 million uninsured adults in Illinois and provide
assistance to millions of middle-income families and small
businesses struggling to keep up with health insurance costs.
Statewide property tax relief to alleviate costs that have
escalated as a result of the state neglecting its primary funding
Investments in the state's transportation infrastructure through
a $3 billion bonded capital road program.
"I believe that Helping Kids Learn will go a long, long way in
strengthening the academic performance of all students, and
especially the most needy. Not just more money, but more money where
it most matters and assures the highest return on investment," said
Glenn W. "Max" McGee, former state superintendent of schools,
current superintendent of Wilmette District 39 and chairman of the
Golden Apple Foundation.
Helping Kids Learn boosts funding by an unprecedented $1.5
billion in fiscal 2008. Under the plan:
General state aid to schools will increase by $800 million, to
$6,058 per student.
An increase of $200 million will boost the state's reimbursement
rate for special education teachers -- the first increase districts
have seen since 1985.
An increase of $153 million will fully fund "mandated
categorical" programs like special education and transportation.
An additional $69 million will accelerate implementation of
Preschool for All, and additional resources will be made available
for school districts to offer full-day kindergarten.
Underperforming schools will share in $100 million in new support
for after-school tutoring, curriculum and textbook enhancements,
longer school days, or other proven strategies that raise student
Illinois' deteriorating schools will find relief in a $1.5
billion capital construction plan for projects to improve and
upgrade classrooms and schools.
In addition, $1 billion will be used to provide property tax
relief to homeowners all over Illinois.
[to top of second column]
The governor proposes paying for his historic investment in
education through his Tax Fairness Plan. The proposal would replace
the flawed and broken corporate income tax with a new gross receipts
tax. Illinois' tax structure is one of the most regressive and
unfair to working families in the nation. Even though large
corporations enjoy the benefit of state services such as education,
health care, roads, public safety and public transportation,
individual taxpayers carry 88 percent of the burden of paying for
them. Individuals -- many of whom are struggling to make ends meet
-- are paying an increasing burden of state income taxes, while the
burden on businesses has gone down, even while corporations are
posting record profits.
Doug Kane, a former state legislator and economist, testified
before the joint committee to discuss many of the misconceptions
about the gross receipts tax, including how pyramiding is not unique
to GRT, how costs are not generally passed on and how Illinois will
remain below the national median for the state tax burden should the
GRT be adopted.
"The charge has been made that the gross receipts tax is a
regressive tax and will make the Illinois tax system more regressive
than it already is. Let's compare it to raising the sales tax, the
personal income tax or the corporate income tax, the three
alternatives to the gross receipts tax that have been suggested.
It's simply not true," said Kane. "The pyramiding is more than
offset by the low rate. Even after pyramiding, the cumulative rate
of the gross receipts tax would be less than the rate that would be
required of any alternative tax that raises the same amount of
Also presenting at the hearing Wednesday was Dr. Joseph Persky, a
professor of economics at the University of Illinois at Chicago.
"No one likes the idea of higher taxes. There is no such thing as
a perfect tax. Every tax changes incentives. Every tax creates an
excess burden on taxpayers," Persky said. "But what of today's
burden on those without health insurance? What of the burden on kids
in schools in dire need of improvement. If the state is to finance
vital services in health care and education, we must expand tax
revenues. While the state should continue to pursue other steps,
such as closing tax loopholes and reducing waste in expenditures,
such efforts cannot make a plausible dent in our needs. Under the
circumstances, the gross receipts tax is the best ready option
available to Illinois."
Most economists agree that while all taxes are disruptive to the
economy, one with a broad base and low rate is the least disruptive
and treats all businesses fairly. The GRT does exactly that. It
taxes all businesses within their sector at the same low rates, so
no one business has an unfair economic advantage over another.
Because the rates are so low, it is easier for businesses to assume
the tax as a cost of doing business, as they would for other costs,
such as increases in rent, property taxes, health care, labor and
Big businesses have been able to avoid paying the corporate
income tax as a result of the flawed tax system. During 2004 alone,
54 percent of the corporations that filed an Illinois income tax
return paid no Illinois corporate income taxes on a cumulative $257
billion in U.S. sales. Additionally, on average, nearly half of the
corporations that generated $50 million or more in annual Illinois
sales paid no income tax between 1997 and 2004.
[Text from file received from
Illinois Office of
Communication and Information]