The fact that Illinois corporations have been lobbying Springfield for tax breaks isn't much of surprise, considering it was something they were doing long before the state tax increase last year and will continue long after the tax increase is repealed. What is surprising is the rate of success they are having and the support they are getting from both sides of the aisle. It is almost as if both sides are fighting over who can give away tax revenue the quickest.
I guess it is logical, since we are in an election cycle and campaigns don't fund themselves. According to Follow the Money, Sears and Sears employees gave over $700,000 to campaigns from 2003-2010 and you rarely donate that much money without expecting a return at some point. That number doesn't even include this past legislative session where actual legislation was passed, so expect that number to skyrocket after the next reporting period. You also have the Illinois public unemployment rate hovering over 10 percent, which is not exactly a politician friendly number, all-in-all you have an environment rich for corporate handouts.
The latest attempt by Republican House Minority Leader Tom Cross, on Wednesday, December 14, took corporate welfare to an entirely new level. In his proposed bill (HB 3918), Leader Cross proposes a plan that would lower the corporate income tax by 0.25 percent anytime the Illinois unemployment rate increases by .3 percent compared to the previous unemployment rate of any of the past three months. In other words, if Illinois corporations reduce their employee levels and put off hiring they could reduce their corporate tax payment. This may be the first time an Illinois political party leader publicly advocated to reward Illinois corporations for NOT hiring people.
With $900 million in tax revenue as an incentive, why would any Illinois corporation hire the unemployed when they can trigger huge tax giveaways. By trimming staffs further and holding off until the next .25 percent reduction takes effect , HB3918 would allow Illinois corporations to do what the Springfield, Illinois GOP has failed to do for almost a year: Repeal the tax increase.
A slightly more logical plan would have been to flip the incentive to reduce the .25 percent when unemployment reduces over a three-month period resulting in a quasi off-set. However, it appears that the real goal of HB3918 isn't to encourage employment but to force the general assembly to continue to cut human service and general fund spending.
Notably lacking in the press conference were actual cuts the Illinois House GOP would recommend to make up for the $6.5 billion shortfall a full repeal would cause or even the $900 million in immediate cuts. Politically why should they? If they force the state to go further in debt by reducing revenue, then the majority party will have to come to the table to cut further. Shared blame rarely creates a party election wave.
It also is very likely the burden for reducing corporate income tax will be placed on the individual through additional taxes via fee increases. A legislative maneuver either party doesn't seem to hold great objections to doing.
While Illinois corporations get a tax break for shedding staff levels, you and I get to shoulder the burden. Only in Illinois would this be presented as a good tax policy.
Filed under: Illinois Assembly