Update: Just to clarify, the individual tax breaks are still on the table, they’re just in a separate package for ease of legislating.
The CME/Sears tax break, much to the surprise of many, collapsed last month when the state Senate version got killed in the House by a vote of 99-8. The CME and Sears components weren’t the issue: it was an additional $76 million in individual tax breaks on top of the $250 million House version, meant to sweeten the pot for representatives. But the individual tax breaks did the exact opposite. So now it’s back in its purest form:
The agreement negotiated this week by House Minority Leader Tom Cross, of Oswego, and Rep. John Bradley, D-Marion, comprises tax relief for Sears and CME, as well as a range of breaks for businesses generally. But it excludes tax breaks for individual workers.
The numbers have shifted a bit, too:
The changes would not take effect until fiscal 2013, which begins July 1, and many would phase in over two years. Ultimately, the business breaks would cost an estimated $218 annually, House Republicans estimate. The breaks for individuals could increase the overall price tag to about $325 million when fully in place, Bradley said.
Which makes it a good time to reiterate a couple points:
* The tax breaks will be “offset” by the expiration of a tax break that allows businesses to claim depreciation all at once rather than over time. So it doesn’t so much cut revenues as defer them, meaning that the new breaks are essentially being offset by the return of existing revenues.
* One thing that comes up occasionally during election season but very rarely in between—except among policy nerds—is Illinois’s flat income tax, which is rare among states. A progressive, graduated income tax—even a not very progressive one—would actually allow the state to wipe out its (very high) corporate tax. This might seem unlikely, but the state’s corporate tax is not, by percentage, a terribly large revenue stream, particularly when compared to individual income taxes, so a small adjustment to the latter can compensate for a large one to the former. Over at Ward Room, Edward McClelland takes a look at how New York governor Andrew Cuomo is pushing to make his state’s income tax more progressive, and suggests Pat Quinn do the same. It wouldn’t be well-recieved among higher-income earners, but a trade for a corporate tax cut—the hike in which has had everyone up in arms for months—might be a more than fair deal.
Photograph: rutlo (CC by 2.0)