In January, the Illinois General Assembly passed a tax increase bill sponsored by Governor Quinn. For the next four years the personal income tax rate rise from 3 percent to 5 percent, and the corporate rate rises from 4.8 percent to 7 percent. In 2015 the rates are scheduled to go down, but to remain higher than their previous values. A tax increase is rarely popular, but the state faces serious budget shortfalls.
Last week a major voice of opposition emerged from Caterpillar, Inc. CEO Doug Oberhelman. In a letter to Governor Quinn, he explained that the new tax landscape makes doing business in Illinois unattractive to Caterpillar, which currently employs 23,000 people in Illinois. Included in the letter were copies of letters from the governors of South Dakota, Nebraska and Texas in which the governors advertised the business friendly features of their states.
Increased tax revenue or jobs. That’s the choice as Oberhelman put it to Governor Quinn. He encouraged the Governor to ease back on the tax hikes and instead balance its budget by cutting spending, pointing to the austerity measures taking by his own company in the wake of the 2008 financial collapse as an example.
The future of the tax increase is uncertain. The last time Illinois raised taxes was in 1989. Originally slated as temporary, the rates were made permanent four years later. The only response yet released from the Governor’s office to the Caterpillar letter was a statement that the Governor welcomes open and honest discourse with Illinois’s business leaders.
For more information on the tax increase or other tax law concerns, contact the Chicago, Illinois tax attorneys at Horowitz & Weinstein.