Friday, January 31, 2014
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Madigan proposes business tax cut

Savings estimated at $700 million in FY14

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[January 31, 2014]  SPRINGFIELD Illinois corporations would see a 50 percent reduction in the state corporate income tax under legislation introduced Thursday by Illinois House Speaker Michael J. Madigan.

"For many years, we have listened to employers about the best manner to improve the business climate. We have tackled worker compensation reform, reduced the estate tax and created an independent tax tribunal. Cutting the corporate income tax rate is another step I am asking the Legislature to consider," Madigan explained.

Under House Bill 4479, the corporate state income tax would be reduced from 7 percent to 3.5 percent on business profits. The move would see Illinois drop from fifth to 35th on the national income tax ranking of the states, according to the Federation of Tax Administrators. The personal property replacement tax paid by business remains unchanged at 2.5 percent and results in a total rate of 6 percent.

"I am introducing this legislation so the Revenue & Finance/State Government Administration Committees' joint hearings on tax policies can consider the impact this will have on business location and expansion plans," Madigan noted.

The measure, which has an effective date of Jan. 1, 2014, would provide an estimated $500 million to $700 million in business savings for fiscal 2014. The fiscal 2015 savings could exceed $1.5 billion.

"I am hopeful this legislation will encourage CEOs to grow their workforces with good-paying jobs," Madigan said.

In December, the speaker called on the Illinois House committees to continue hearings on tax policy questions in the wake of a new wave of businesses calling for tax breaks as a condition for relocating to or remaining in Illinois.

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At the time, Madigan argued: "We should take a more long-term approach to helping all job-creating businesses in Illinois thrive and succeed. This must include a thorough review of how we currently provide incentives to big corporations."

During the 2013 North Carolina corporate rate cut debate, Gov. Pat McCrory argued that the tax was "economically destructive" and a lower rate was "critical to putting residents back to work." North Carolina cuts rates from 6.9 percent to 6.0 percent this year and 5 percent in 2015.

"State tax policy can have a critical impact on multinational corporations, especially when congressional gridlock has stalled any meaningful action in Washington," Madigan said.

The speaker's cuts will make Illinois rates less than or equal to the surrounding states. According to the Federation of Tax Administrators, the surrounding state rates are 6 percent in Kentucky, 7.5 percent in Indiana, 12 percent in Iowa, 6.25 percent in Missouri and 7.9 percent in Wisconsin.

[Text from news release received from the Illinois House of Representatives]

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