 The governor's Tax Fairness Plan
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 -- despite the fact that corporations are posting
record profits."We have a broken tax structure in Illinois that
has allowed big businesses to reduce their income tax burden more
and more over time at the expense of middle-class families. When
corporations don't pay their fair share, our children suffer because
their schools are not adequately funded, homeowners suffer because
their property taxes keep rising, and working people find it harder
and harder to afford health insurance. Right now 1.4 million people
in our state don't have health insurance, and millions more are
struggling to keep the coverage they have. We have an historic
opportunity to turn things around. Nearly 13 million Illinoisans
elected us to help make their lives better," Blagojevich said. "It
would be wrong to do nothing and let the problems facing families in
our state get worse. It would be wrong to try to fix the problems by
taking more money out of working people's pockets. The challenges we
confront are comprehensive; our solution needs to be comprehensive
as well. I look forward to working with you to make history."
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
other bills.
"The gross receipts tax is the best ready option available to
Illinois," said Joseph Persky, professor of economics at the
University of Illinois at Chicago and a member of the governor's
Council of Economic Advisors. "As put forward in the governor's
proposal, an exemption for small businesses (less than $2 million in
sales) will keep the tax from being a nuisance. Given our serious
needs, is any alternative tax approach more attractive than the
governor's gross receipts proposal? I think not. This plan is
pragmatic and workable. It can generate large amounts of revenues
with little complexity. This is a fair and minimally invasive
approach to fund an ambitious and much-needed public agenda."
Under the governor's plan, all businesses that generate less than
$2 million in revenue will be exempt from the GRT. The legislation
approved in committee Tuesday also includes an Illinois job tax
credit for businesses employing workers in Illinois. The tax credit
will allow Illinois companies to offset their gross receipts tax
based on the number of employees in Illinois. Goods-producing
companies that have and retain jobs in Illinois would get an annual
tax credit of $2,000 for each full-time job (the equivalent of 1,500
work hours per year) up to $50,000, while service-based companies
would get a tax credit of $2,000 for each full-time job up to
$100,000. When including the new Illinois job tax credit, which
helps all businesses, especially the small businesses that generate
many of the new jobs in Illinois, then most businesses with less
than $5 million in revenue in Illinois will not be affected by the
GRT -- more than 90 percent of all businesses in Illinois.
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 |
 The governor's Tax Fairness Plan would give the state a solid,
dependable revenue stream for moving forward to the Investing in
Families plan with $7.6 billion that will provide:
-
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 obligation.
-
Investments in the
state's transportation infrastructure through a $3 billion
bonded capital road program.
"The governor has proposed a bold new health care plan that would
modernize the health care delivery system in the state while
generating a significant reduction in the number of uninsured," said
Professor Ken Thorpe, Ph.D., Robert W. Woodruff Professor and
chairman, Emory University. "The plan would generate over $7 billion
in lower health insurance costs to those with insurance -- more than
double what the state will spend on the plan -- when fully
implemented. These savings come from the new Illinois Covered Choice
and Rebate plans, reductions in cost shifting, and the statewide use
of health information technology and a new best-practice approach
for preventing and managing chronic illness."
More than 250 organizations also support Blagojevich's plan,
including the Illinois Federation of Teachers, the Illinois
Education Association, AARP Illinois, Advocate Health Care, AIDS
Care, Illinois AFL-CIO, AFSCME Council 31, Champaign-Urbana Public
Health District, Chicago Area HIV/AIDS Caucus, Chicago Area Project,
Chicago Black United Communities, Chicago Foundation for Women,
George Washington Carver Association, Illinois Hospital Association,
Illinois Maternal and Child Health Coalition, Illinois Planned
Parenthood, Illinois Public Health Association, Illinois State Black
Chamber of Commerce, National Black Nurses Association, Open Door
Clinic, SEIU Illinois Council, Springfield Supportive Living, and
Springfield Urban League.
"The revenue provided by GRT will help hundreds of K-12 schools
and higher education solve a fiscal crisis that gets worse year
after year. These education needs are real. Class sizes are growing.
Positive programs are being cut. Every election, local property
taxpayers are being asked to bear a greater share of the burden,"
said James Dougherty, president of the Illinois Federation of
Teachers.
"The GRT represents an historic opportunity to ensure, for the
first time, that everyone in Illinois has access to affordable,
high-quality health care, which will make the state a better place
to work, live and raise a family. The governor's proposal addresses
both sides of the equation -- not only how to cover people, but how
to make sure the dollars are there to provide the coverage," said
Howard Peters, senior vice president, government relations, for the
Illinois Hospital Association.
[Text from file received from
the
Illinois Office of
Communication and Information] |
