Monday, April 09, 2007

John McCarron on what policy changes led to businesses paying fewer taxes

The meat of McCarron's column today in the Trib is a run-down of policy changes over the last decade that have resulted in businesses paying less of the tax burden in Illinois. He puts Pat Quinn as the potential consensus-builder in the Capitol, but his analysis probably suffers from the "great leader" approach that conventional wisdom still applies to Illinois policy-making, as if legislators can't find a consensus through public debate. Here's the best part:

Quinn knows the history and could remind the Illinois State Chamber of Commerce, the Illinois Manufacturers' Association and the Illinois Retail Merchants Association of their recent fiscal sleights of hand. He could remind them of the "single sales factor" tax break they won from the legislature in 1999, which greatly lowered the state income tax liability of our largest corporations. Or that many of our privately held corporations avoid state income taxes altogether by zeroing out taxable profits with business "expenses," such as ultragenerous executive compensation packages.

He also could remind them that northern Illinois businesses have been paying a reduced share of the local property tax burden now that residential assessments here have been skyrocketing. He could remind them that many businesses have escaped state and local utility taxes by buying electricity and natural gas "wholesale" under deregulation schemes that find homeowners and small landlords paying ever-higher retail prices and taxes. He could remind them that services still go untaxed in Illinois, and that, while working stiffs do get haircuts and have their cars repaired, most of those untaxed services are sold by accountancies, law firms, landscapers and others who cater to the well-to-do.

Fact is, Illinois is a relatively low-tax state for corporations and for wealthy individuals, but with our stiff sales tax and non-graduated income tax, we're one of the highest-tax states for the working poor.

Seems compelling to me. It would have been nice if he could have suggested a tax package instead of simply calling for Pat Quinn or someone else to do it, but he added value to the debate by laying out how business are, in fact, paying less than they had been, largely because of policy choices over the last decade.

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