NCPA - National Center for Policy Analysis

BLAGOTAX WILL HARM ILLINOIS' ECONOMY

April 2, 2007

Gov. Rod Blagojevich's (D) scheme to enact the largest tax increase in Illinois history is bad public policy and should be rejected, says Doug Whitley, president and CEO of the Illinois Chamber of Commerce.

Consider:

  • The governor's proposed gross receipts tax would raise prices on virtually all goods and services purchased by Illinois consumers. 
  • It would also place an enormous added tax on employers -- large and small -- who would be forced to pay the tax whether their companies are profitable or not. 
  • The proposal would significantly raise the cost of doing business in Illinois.

State legislators understand a vote for the gross receipts tax would be a vote to raise consumer prices on everyone, including seniors and low-income families, while taking money from employers that could be used to invest in new jobs, new equipment, new facilities, provide a salary increase to deserving workers or meet other business expenses.

Yet Blagojevich misleads the public by arguing the tax is aimed at "big business" and that businesses aren't paying their "fair share" of taxes.  Those arguments are false, says Whitley:

  • The National Federation of Independent Business estimates the average Illinois business with 10 or more employees will be forced to pay the tax.
  • A study from Ernst & Young shows last year Illinois employers paid $29.1 billion in state and local taxes in Illinois, or nearly half (49.8 percent) the taxes collected in the state; that's 10 percent higher than the national average and also considerably higher than businesses pay in any of the neighboring Midwestern states.
  • With the Blagojevich tax increases, the Illinois Chamber estimates employers would pay 55 percent of the tax burden which will encourage businesses to lay off workers, close the doors or move out of state.

Source: Doug Whitley, "Receipts tax would punish consumers, state's economy," Chicago Sun-Times, April 2, 2007.

 

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