Combine Corporate Income Tax President Joe Biden wants to use the Illinois tax to fund his infrastructure plan. The resulting tax rate would be 35.4% – the fifth highest in the country and the second highest in the Midwest.
President Joe Biden’s plan to raise corporate tax rates to 28% will do the Illinois business climate no favors, bringing the combined state and federal tax rate to the fifth highest in the country, according to the Tax Foundation.
Biden is not alone and aimed at job creation: Illinois governor JB Pritzker has repeatedly put forward plans to get more taxes out of Illinois companies as they struggle to recover from its COVID-19 restrictions , which closed 35% of small businesses in Illinois in 2020. These small businesses are the most prolific job makers in Illinois. In Illinois, nearly 500,000 workers are still unemployed, up 7.8% in February. According to the latest IDES data, this is significantly higher than the national unemployment rate of 6.6%.
Biden is seeking a corporate tax hike to fund its infrastructure plan. The federal corporate income tax is currently 21% and he is proposing to increase it to 28%. That would bring the effective corporate tax rate in Illinois to 35.4%, the second highest in the Midwest and the fifth highest in the nation.
At the same time, Pritzker is not pursuing spending reforms, but rather nine new taxes worth nearly $ 1 billion, including those that would hamper job creation efforts. The move was rejected by the Illinois Chamber of Commerce and Republicans because Pritzker was not unfairly filling in “loopholes” as he claimed, but instead sought to retract a deal he made early in his tenure for key tax incentives and job creation deductions Has.
Today, 35% of small businesses are closed compared to before the pandemic, more than any other Midwestern state except Michigan. The massive decline in the number of small businesses in Illinois is the eighth worst in the nation.
It is also rumored that Pritzker is aiming to lift a pandemic tax credit for small businesses that would take away $ 500-1 billion more from them if they struggle to recover.
The small businesses in Illinois are struggling with COVID-19 and government-mandated abatement protocols. Many small business owners struggle to pay rent, pay their employees, and keep their businesses alive to provide for their families. Small businesses are the largest job creator in Illinois, accounting for more than 69% of the net workforce.
It is critical to the recovery of the state that these small businesses survive and reopen. The economic recovery in Illinois is already lagging behind most states.
It is imperative that lawmakers work to avoid the harm that tax hikes would cause to businesses and jobs. Economists speak out against tax hikes during a recession. Tax increases are robbing entrepreneurs of resources they need to keep their businesses alive and to hire new employees during the pandemic.
Rather than constantly chasing tax increases that would further adversely affect Illinois economic recovery, Illinois can improve its finances and continue to provide core services, primarily through implementing a constitutional pension reform. The Illinois Policy Institute offers a reform plan that balances the state budget without tax increases, along with other tax adjustments that can provide overburdened Illinois taxpayers a path to debt reduction, lower taxes, and more effective state government.
Harming small businesses and large corporations may be one strategy for making politicians money to spend, but it takes away jobs that give workers money to spend.