PI Original Steven Ross Johnson Monday May 14th, 2012, 5:27pm

Business Butts Heads With Cullerton On Corporate State Income Tax Transparency Bill

A bill currently making its way through the Illinois Senate that would require public-held companies to report how much they pay in state income taxes is being lauded by a local community group as being a first step toward creating a more equitable tax structure, while business leaders have decried the measure, alleging it could further perpetuate the state’s reputation of being a bad place to do business.

A bill currently making its way through the Illinois Senate that would require public-held companies to report how much they pay in state income taxes is being lauded by a local community group as being a first step toward creating a more equitable tax structure, while business leaders have decried the measure, alleging it could further perpetuate the state’s reputation of being a bad place to do business.

The proposed measure was introduced last week by Senate President John Cullerton and would call on companies doing business in the state to reveal what they earned in Illinois, as well as how much they were taxed both before and after receiving any tax credits.

According to Cullerton spokesman Ron Holmes, the purpose of S.B. 282 was to create a template in which legislators as well as the public could effectively evaluate how the state goes about ensuring fairness when it came to its corporate tax policy. 

“With this [legislation], we will have all of the information that not only legislators need, but also residents of the state would like to know,” Holmes said. “We believe that by seeing a corporation’s income tax before a tax credit or income tax after the tax credit, it will truly allow us to evaluate whether or not there is a need to address the corporate tax rate in Illinois, or how we go about giving corporate tax breaks and incentives.”

Under the plan, companies that are required to adhere to the measure would not have to publicly disclose tax information for two years after the end of any given tax year as a way of ensuring that proprietary information is not revealed. 

According to Lakeview Action Coalition Board Member Leader Allen Wesolowski, the measure was introduced at the behest of the group as a way to address the state’s current budget crisis that has seen a number of cuts in funding - as well as delays in payments - to social service agencies over the past several years.

“In our view, the current budget crisis is as much a revenue crisis as anything,” Wesolowski said. “We need to make sure that all of our revenue sources are being adequately tapped.”

Publicly-held firms currently disclose their income tax information to the Illinois Department of Revenue, which LAC noted has reported that as many as two-thirds of corporations pay no state income taxes.

“Corporations take advantage of publicly-funded roads, the infrastructures, public safety, and where workers go to schools, where they’re taught by Illinois teachers,” said Sue Gries, leader of LAC’s Economic Justice Task Force. “So if they’re taking advantage of all of these state-funded things, we need to make sure that they’re paying their fair share to pay for those things.”

But as Illinois Chamber of Commerce President and CEO Doug Whitley contended, such a measure would only help to further hinder efforts to attract more companies –and with them jobs – to a state where the unemployment rate has remained above 9 percent since 2009.

“It’s like drawing attention to ourselves in an unflattering way, and this is being done at the very time when we’re doing everything we can to promote jobs and growth and prosperity and bring business to Illinois,” Whitley said. “We’re doing everything we can to improve our image across the country, which by the way, is not a particularly flattering image, and then we see legislation like [S.B.] 282, which just gets people unnecessarily, inappropriately excited about the message Illinois wants to send out to employers.”  

Recent reports have brought into question the motivation behind the measure, with some bill opponents alleging it was driven by politics as part of an ongoing partisan battle that erupted last year when Democratic lawmakers passed a temporary increase of the state income tax, which many companies decried eventually leading to threats by Sears and CME Group to leave the state unless they were provided tax incentives.

Holmes refuted those claims, saying the purpose of the bill was to provide residents with the same type of information that is already privy to many of those companies’ investment holders.

“We’re simply trying to make sure that publicly-traded corporations in Illinois – corporations that are already telling their shareholders what their liabilities and losses are based on their investments – [make the information available]. We just want to make sure that Illinois residents also know that if they’ve invested in these companies what their return on investment is,” Holmes said.

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