Tax reform to save social services? Nah. To give corporate tax breaks? Sure.

Tax reform to save social services? Nah. To give corporate tax breaks? Sure.

Earlier this year, advocates of state social service providers were asking the state to change its tax code, potentially bringing in millions that could save cuts that would directly affect Illinois' most vulnerable.

They were ignored. But now the same idea is being brought up again. Are Illinois legislators reconsidering the effect of cuts on the homeless, the mentally ill, single mothers and the working poor? Nope. They want to use the money to give corporations tax breaks.

The Associated Press has a great article this week on the controversy, explaining in detail the "decoupling" measure that lawmakers are considering. In short, it involves Illinois breaking away from the federal tax code and not allowing businesses to deduct the depreciation of their assets all at once, as they currently do. According to the article, it could save Illinois $570 million a year.

The idea went nowhere in the spring largely because of opposition from business groups, which considered decoupling to be a tax increase. Lawmakers wanted nothing to do with anything labeled an increase so soon after raising income taxes.

Now, however, they're on board with the idea.

"Many in the business community believe it's a trade-off worth making in order to get tax relief they desperately need," said Patty Schuh, spokeswoman for Senate Republican Leader Christine Radogno, R-Lemont.

Beneficiaries include the CME group and Sears Holding Corporation. But social service advocates are pointing out another problem with this measure. It would allow the state to give corporate tax breaks, but the money will run out before then. The revenue from decoupling would come in during the next two years. The tax break economic development area that was attached to the Tax Increment Financing District reform bill would last 15 years. Hmmm.

And Larry Joseph from Illinois Action for Children points out that the state owes millions to another group: social service providers. "That revenue could have been used to prevent budget cuts that were made or to pay down some of the backlog of unpaid bills. Now what's being proposed is to do neither of those things," Joseph said.

What about the homeless, whose services have been cut in half? According to the weather channel, tonight's temperatures are going to dip below freezing. But using decoupling to restore funds that would open more shelter beds and a way to get to them doesn't seem to be on the table.

Photo credit: Fibonacci Blue

© Community Renewal Society 2011


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