SPRINGFIELD – If lawmakers adopt a “Business Opportunity Tax Act.” it would make Illinois one of the few states in the nation that taxes payroll, and would return personal and corporate tax rates to near record-high rates that residents were subject to during the term of Gov. Pat Quinn.
And with the state already in economic decline - as seen by an out-migration of jobs and population - the new tax would likely have the opposite effect of growing opportunities for business owners, according to Illinois Chamber of Commerce president Todd Maisch.
“We’re calling it a ‘jobs tax,’ because it’s literally a tax on jobs,” Maisch told the Record. “It’s an idea that I think was not vetted internally. It’s out there, and a bad idea, and the Illinois Chamber is very much opposed.”
Maisch said the proposed tax will be especially tough on manufacturing in Illinois, given the jobs decline in that sector.
“Other states have been adding north of 100,000 manufacturing jobs, while Illinois has actually lost manufacturing,” he said.
The proposal would tax employers based on payroll, separating them into five different brackets with employers paying between $225 and $15,000 in taxes on payroll for a taxable year.
Another group critical of the proposal is the Illnois Policy Institute, which has stated the tax would “worsen Illinois’ position significantly by increasing the incentive for businesses to move their labor force out of Illinois.”
The tax would not only negatively impact big business, Maisch said it would disproportionately impact small business owners. He said it would charge fees based on the size of payroll at a time when Illinois residents already suffer under one of the highest tax burdens in the nation.
“Everyone should be opposed to a tax on creating jobs, which is what this proposal really is," he said. "But to make it even worse, it really hammers small businesses more so than our larger employers. It takes a bad idea and makes it even worse, by targeting small businesses which create, of course, most of the jobs in the state of Illinois and the nation.”
He said that in many communities, when the economy gets tough, local government works to establish tax incentives for businesses that choose that locale for their investment.
“This (tax) is 180 degrees the other way,” said Maisch. “I think it was an idea that was not very well thought out and one that I’m increasingly confident that the Legislature will reject.”
That doesn’t mean that Maisch doesn’t recognize the revenue problems Illinois is grappling with; in fact, he said that business people are well aware of the problems, and that business owners are more than willing to come to the table and discuss what can be done to help the state return to prosperity.
“There is going to be a need for revenue, so businesses are ready to have that discussion,” Maisch said, “but only after we know what the state is going to do to accelerate growth, number one; and number two, what they’re going to do to constrain government spending. There is going to be a discussion about revenue; I don’t think it’s going to be centered on a jobs tax.”