Lawmakers Weigh Tax Bills That Would Hurt Small Businesses

Date: January 27, 2017

With the nearly two-year budget stalemate as the No. 1 issue this session, Democratic and Republican Senate leaders got together to fashion several bills aimed at reaching a compromise. Some of Governor Rauner’s economic and business reforms, along with revenue and tax increases, were included. The measures were all written so that if one reform fails to pass, they all would.

While we give credit to Senate leaders for trying to break the logjam, clearly the proposals were not ready for prime time. Among the 13 bills proposed, some were non-starters as far as small business is concerned. These included a proposed increase in the state minimum wage to $11 an hour over five years, a one-cent-per-ounce tax on sugary drinks, and inadequate reforms to Illinois’ workers’ compensation laws.

Feedback on the proposals was loud and immediate. The sugary drink tax was pulled without a hearing. Unfortunately, it was replaced by a proposal to create the “Business Opportunity Tax,” which is ironic in that it would lower opportunities for businesses to stay open in Illinois. It would add a tax on payrolls as well as contracting work that individuals and businesses incur. The tax started at $225 per year for payrolls under $100,000, eventually escalating to $15,000 for payrolls over $1.5 million. 

And to make matters worse, they proposed a new 5-percent excise tax on storage businesses; amusement parks, tracks, sporting events; repair and maintenance work; landscaping work; and laundry and dry-cleaning services.

NFIB voiced our strong opposition to all the above and have it halted for the time being. We continue to work with other business groups in recommending major changes to any “grand bargain” of reforms and taxes that impact NFIB members.

Also, as expected there is an income tax hike proposed that appears inescapable.

Individuals rates would go from 3.75 to 4.99 percent and corporations 5.25 to 7 percent (not including the personal property replacement tax). The state owes around $11.7 billion in unpaid bills, many to small businesses. The stop-gap budget enacted over the first half of the state fiscal year only exacerbated the problem.

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