PI Original Ellyn Fortino Friday September 27th, 2013, 4:14pm

State Hearing Reignites Debate Over Corporate Tax Disclosure In Illinois

Corporate tax disclosure in Illinois was the subject of a state hearing held in Chicago Friday, which attracted about 100 supporters. Progress Illinois was there for the hearing.

Supporters of legislation that calls for publicly-traded Illinois corporations to disclose the amount they pay in state income taxes packed a House Revenue and Finance Committee hearing on the matter in Chicago Friday. 

The Illinois Corporate Responsibility and Tax disclosure Act, HB 3627, would be a major step forward in an effort to fix the state's "broken tax system", according to those with Fair Economy Illinois, which staged a rally and press conference before the hearing.

The bill's opponents, however, including the Illinois Manufacturers' Association, argue that requiring companies to share such information would undermine taxpayer confidentiality and put corporations at a competitive disadvantage.

As it stands, state legislators and the public are largely left in the dark when it comes to the details surrounding large firms' corporate income tax liabilities. What is known, however, is that two-thirds of Illinois' corporations pay no corporate income tax to the state, according to the Illinois Department of Revenue.

"I believe that sunshine is the best disinfectant, and all House Bill 3627 does is provide some sunshine into the question of which large corporations pay taxes in Illinois, which do not, and why," the bill's sponsor, House Majority Leader Barbara Flynn Currie (D-Chicago), told reporters before the hearing. "I'm not prepared to come to the conclusion that it's all a scam, and a game, and gimmick, but we don’t know the answer to that question until we have basic information about how these corporations are able to avoid paying taxes to the state of Illinois."

In addition to reporting income taxes paid to the state, publicly-held companies would have to disclose  any tax credits received as well as net and taxable income. Such information would be reported to the secretary of state. It would then be available to the public via a searchable, online database two years after tax returns were filed. The bill does not impact small businesses and the reporting of any information that is considered confidential under federal law would be prohibited.

At the federal level, at least four Illinois-based corporations had no net federal income tax from 2008 through 2011, according to research by Citizens for Tax Justice. Those firms were Boeing, Baxter International, Integrys Energy Group and Navistar International. Officers with Fair Economy Illinois say they assume these corporations aren't paying any corporate income taxes to Illinois. If this new legislation passes, it would help reveal if that's truly the case.

"If (corporations) have no profit, I understand they can't pay, but you're looking at companies across the state and across the country that are indeed extremely profitable," Currie added. "So if the legislature has accidentally created loopholes and gimmicks in the name of job creation that then are stultifying our ability to meet basic education and human service needs through the state budget, then it's time for a serious debate [and] a serious discussion."

Back in November, the Illinois Senate passed a corporate income tax disclosure measure, SB 282, but it never made it out of the House Revenue Committee before the legislative session ended.

April Verrett, executive vice president of SEIU* Healthcare Illinois-Indiana-Missouri-Kansas, said when large, publicly-traded corporations avoid paying their fair share in taxes, it is not a victimless crime.

"Corporate tax avoidance means larger classrooms for our children, less police officers, fewer job training slots, worse infrastructure, higher unemployment and cutbacks to early learning and child care assistance to name only a few critical issues," she said.

When corporations get out of paying taxes, the "middle class and lower-income families have to pick up the tab and pay more of their meager wages to make up for the state's lost revenue."

According to the Governor's Office of Management and Budget, 80 percent of state revenue comes from income taxes paid by individual wage earners and sales tax revenue, while just 9 percent of Illinois' revenue comes from corporate income taxes.

David Borris, owner of Hel's Kitchen Catering in Northbrook, noted that small business owners across the state pay their fair share, and large corporations should do the same. Borris also blasted one of the bill's opponents, the Illinois Chamber of Commerce, in his testimony. He said the chamber is acting as a lobbyist for big corporations that already "have plenty of money to spend on armies of lobbyists, lawyers and tax accountants to help them rig the game and fix tax policy to pad their profits."

But Mark Denzler, vice president and chief operating officer for the Illinois Manufacturers' Association, said requiring companies to release confidential tax information undermines a bedrock of the tax system: the privacy of all taxpayers, whether they’re individuals or businesses. He said the association believes the bill, if passed, would be challenged in court and ultimately found in violation of the Internal Revenue Code.

Overall, Denzler said the bill discriminates against a small group of Illinois-based companies.

"They're really looking at just a very few select companies for kind of a public flogging ... It shouldn’t be just picking out a small, select few people, taking them to the public square and hanging them up," he said.

The hearing was on the subject matter only, and no vote was taken.

*The Illinois SEIU Council sponsors this website.


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