Governor Blagojevich assails Big Business' efforts to retain special tax loopholes by distorting truth about his Tax Fairness Plan

CHICAGO - Governor Rod R. Blagojevich today criticized the sponsors of a new television ad that misinforms the public about his proposed Tax Fairness plan that would ensure businesses are paying their fair share of state taxes to support important services like public education and healthcare.  The Governor also launched a new website to educate Illinoisans about the growing need to change the state's tax system.   The new website, www.illinois.gov/taxfairness, provides the public with facts about the existing tax system that requires working people to shoulder most of the tax burden at a time when corporations are enjoying record profits. 

 

"What the sponsors of this ad deliberately don't tell you is that the average individual taxpayer in Illinois pays ten times more in state income taxes than thousands of the wealthiest businesses.  Now that we're asking those businesses to pay their fair share so regular working families can afford healthcare and can send their children to quality schools, big business is resorting to distortions and scare tactics," said Gov. Blagojevich. "We're going to keep working hard to make sure the public has access to the facts about how the current tax system is stacked against individuals and families - and how our Tax Fairness plan makes sure Illinois businesses stay competitive while requiring all entities that conduct business in our state to help support education and healthcare."

 

The Governor has proposed a new tax system, the Gross Receipts Tax (GRT), to replace the Corporate Income Tax (CIT), which is a flawed and broken system that places an unfair burden on individuals to pay for state services.  Illinois tax structure is one of the most regressive and unfair to working families in the nation.  The state income tax burden lies primarily with individuals - many who are struggling to make ends meet - while the burden on businesses has gone down, even while corporations are posting record profits.  In fact, many large corporations pay little or nothing in corporate income taxes.

 

Most economists agree while all taxes are disruptive to the economy, one with a broad base and low rate is the least disruptive and treats all businesses fairly. The GRT is exactly that. It taxes all businesses within their sector at the same low rate, so no one business has an unfair economic advantage over another. Because the rates are so low, it is easier for businesses to assume the tax as a cost of doing business, as they would for other costs, such as increases in rent, property taxes, labor and all bills.

 

Similar to the tactics used when the Governor pushed for and won approval for an increase in the state's minimum wage, the Big Business-sponsored ad attempts to scare the public into believing the GRT will harm the state's economy:

 

MYTH: The ad claims that GRT is a tax on consumers.

FACT: There is nothing stopping businesses from raising prices now.  Businesses have to look at the market and decide how to set prices so they can stay competitive.  Under GRT, the marketplace will continue to dictate prices.  The GRT is a very low rate tax of .5% to 1.8% applied to all transactions a business conducts in Illinois - so all businesses in the same sector are subject to the same rate.

 

MYTH: The ad claims that GRT will "suck the life blood" out of Illinois communities.

FACT:  By making corporations pay their fair share, the GRT will enable the state to pump $10 billion into local schools over the next four years and give every person in the state access to affordable healthcare.  Those are investments that will set Illinois apart from its neighbors and rest of the country, and significantly improve the lives of people who live here.  And in Washington, where the GRT has been in place for decades, the state has outperformed rest of the nation in economic growth consistently since 1980.  In fact, some of the nation's most successful businesses call Washington State home, including: Microsoft, Boeing, and Starbucks.

 

MYTH:  The ad claims GRT will drive jobs out of state.

FACT:  It doesn't matter where a business is located, any business that has transactions in Illinois' $1 trillion marketplace would pay the low-rate GRT.  It would be illogical to move away from Illinois when our state provides one of the most vibrant and competitive overall markets in the country.  In addition, what Big Business fails to point out is that all exports are exempt - so Illinois-based businesses that sell outside of the state are not impacted; and all businesses that have less than $1 million in gross receipts are exempted - which accounts for 75% of businesses in the state.      

 

Facts about Illinois' unfair tax system:

By adopting a tax system that is fairest for all businesses, and not just some, the Governor's Tax Fairness Plan will Invest in Illinois Families:

"While the business community continues to resort to scare tactics year after year, Gov. Blagojevich has made great strides through his first term to reprioritize Illinois government so that it works on behalf of people.  This is another important and historic step, so individuals and small businesses don't pay the ever increasing share of state taxes," said the Governor's Chief Operating Officer John Filan.  "The loopholes in Illinois' corporate tax system are so pervasive that only a new system, the gross receipts tax, can fix it.  Individuals and small businesses alike will benefit from the Governor's Tax Fairness Plan, and the state will be able to make critical investments in education and healthcare to benefit people of all ages."

 

In recent weeks, the Governor's Invest in Illinois Families initiative has been endorsed by a growing list of statewide supporters including Chicago Area Project and Illinois Council of Area Projects, Illinois Federation of Teachers and the Illinois Education Association, the AIDS Foundation of Chicago, and dozens of African American ministers.  In addition, hundreds of healthcare and education advocates and organizations, small business owners and private individuals voiced their support for the Governor's Investing in Families plan at events in Alton, Chicago, Danville, Decatur, DuQuoin, Peoria, Quincy, Rock Island, and Rockford.