The Illinois Business Alliance is a leading voice for the Illinois business community.
IBA has argued repeatedly that raising taxes on businesses through the "fair tax" would deter business investment and job creation in Illinois. Given the economic devastation inflicted on Illinois businesses and the working class by Gov. Pritzker's stay-at-home order, IBA has called for the graduated income tax amendment to be withdrawn from the November 2020 ballot.
If voters approve the graduated income tax amendment in November and Pritzker's "fair tax" rates take effect:
IMPACT ON PASS-THROUGH ENTITIES
Pass-through business income would be taxed at a top rate of 9.49% with PPRT.
The rate on pass-through businesses would be the fourth-highest in the country.
Every pass-through business owner who claims $250,001 or more in income would see a tax increase of at least 43% on all income beyond $250,000.
Businesses responsible for approximately 84% of Illinois' pass-through business income would be hit with higher taxes.
IMPACT ON CORPORATIONS
The base corporate income tax rate would increase to 7.99% from 7% and top out at 10.49% with PPRT.
By 2021, after Iowa's corporate tax cut takes effect, Illinois would have the second-highest corporate income tax rate in the country.
The highest individual rate would be 7.99%, which means the corporate tax rate (either as a single rate or the top rate) could be raised as high as 12.78%. That means corporations could be subject to a combined rate of 15.28% with PPRT.
"This tax proposal will hit businesses — especially small businesses — very hard. It will hurt the very businesses that generate the overwhelming majority of income, jobs and investment in our state. I know what business owners do when they face a higher tax bill. Let me warn you: Should voters approve the graduated income tax amendment in November, the fallout will be disastrous....If we switch to a graduated income tax system, the legislature will carve up the tax base, applying different rates to different taxpayers, arbitrarily raising taxes on businesses — large and small — whenever they'd like. And the tax rate business owners pay would fluctuate based on their income in any given year. That would create tremendous instability and uncertainty for Illinois' job creators, who use business income to build capital to grow and expand."
-Gary Rabine, IBA member, Chicago Tribune op-ed