Between an eventual 80% increase in the state minimum wage and a proposed constitutional amendment to raise income taxes on entrepreneurs and working families, small business is not feeling the love the then-candidate promised.
When he was running for governor, J.B. Pritzker said he was “a big proponent of small businesses.” Candidate Pritzker said, “We need to help people start businesses and grow those that already exist.”
Governor Pritzker, though, fought for legislation that is not only going to make it harder for entrepreneurs to start a business but could put some out of business.
Between an eventual 80% increase in the state minimum wage and a proposed constitutional amendment to raise income taxes on entrepreneurs and working families, small business is not feeling the love the then-candidate promised.
It’s easy to forget, but small business accounts for 99.6% of all employers in the state, and small businesses employ 45.5% of the state’s private-sector workforce, according to the latest figures from the U.S. Small Business Administration.
Put simply, when you pass legislation that hurts small business, you pass legislation that hurts Illinois.
Pritzker’s minimum wage increase and progressive income tax will do little besides drive up the cost of living, working, and running a business in Illinois.
It isn’t like small businesses can simply raise prices to cover the substantial increase in the cost of doing business.
A small café can only charge so much for a soup and sandwich before customers stop eating there. Another casualty will be jobs for younger workers just entering the workforce. A business can’t afford to pay $15 an hour to inexperienced workers who need training and don’t add the same value to the business. And their experienced employees will rightly expect to make more as the entry-level wage goes up.
One thing Governor Pritzker could do to prove he’s really “big proponent of small business” is support a more robust small business tax credit than the current one in the new minimum wage law. That would go a long way in helping the tens of thousands of our Main Street small businesses.
The proposed graduated income tax amendment is also deeply concerning for small businesses. Without getting too technical, most small businesses are organized as “pass-through” entities. That means their business income is reported on their individual tax returns. So, should the proposed amendment pass in 2020, their state income taxes could go over 12.5%. Then add the mandated Personal Property Replacement Tax of 1.5 to 2.5%, and the top rate could climb to 15%.
In this year’s legislative session, small businesses did not get the needed reforms on staggering workers’ compensation costs. They did not see relief on property taxes. They did not see any attempt to fix the state’s public pension debt fiasco. They did not see any meaningful attempts at reducing taxpayers’ burdens. No, instead they got more workplace regulations and increased chances for lawsuits.
They also saw the largest state budget ever enacted. And a $45 billion infrastructure that will double the state gas and diesel fuel tax at the pump. Small businesses appreciate improved roads and bridges as much as anyone, but a close look at the capital bill reveals a boatload of pork projects, including neighborhood dog parks and pickle-ball courts.
Governor Pritzker, we need you to lead a ‘government that stands for small businesses.’ Businesses need you to support policies that enable them, not disable them. They stand ready to work with you on those kinds of policies if you really mean to keep all your campaign promises.
Mark Grant is Illinois state director of NFIB, the nation’s leading small business advocacy organization. He lives in Springfield.
