The political right and the business community gasped on Election Day when voters in California and Illinois gave the Democratic Party supermajorities in those two states’ legislatures, which will be coupled with Democratic governors.
You just watch, they said. Taxes will skyrocket. They’ll increase regulations. Businesses will flee to Texas. Two states that are already viewed as being unfriendly to business will be even more so.
And the only people standing in the way are two governors -- Pat Quinn, a political gadfly for most of his career, and Jerry Brown, a guy Mike Royko famously nicknamed “Governor Moonbeam.”
So far, Illinois is beating California to the punch in fulfilling the right’s prediction of policies viewed as anti-business even before the Democrats’ supermajority is sworn in.
Senate President John Cullerton, D-Chicago, is pushing a bill that would require publicly traded corporations to disclose how much they paid in state income taxes. Cullerton appeared at a news conference to promote the bill with House Majority Leader Barbara Flynn Currie, D-Chicago, before the legislation cleared the Senate last week. Currie’s support usually means House Speaker Michael Madigan also supports the bill.
Democrats, Cullerton in particular, have chafed at the complaining by some businesses about the 2011 state income tax increase that hit both individuals and businesses. Two-thirds of the state’s corporations pay no income taxes.
“Public policymakers can’t make good public policy if they don’t know what’s going on,” Currie said, indicating reform of the corporate tax code could be in the making. “We don’t know whether those 66 percent of corporations that pay no income tax don’t have any profits.”
Democrats have also said they need to know how much corporations are paying so that when companies like Sears or CME come asking for tax handouts, lawmakers can make a judgment based on how much a company is being paid in taxes.
The whining about taxes nationwide by large corporations that, as a group, are sitting on trillions in cash and not hiring workers is quite tiresome. But this legislation contributes to the state’s anti-business reputation. Businesses are not fleeing Illinois as some predicted, but the reputation the state has isn’t helping bring many in, either. Privacy is a legitimate concern as well.
We are sympathetic to the argument that the state shouldn’t give handouts to corporations without knowing how much in taxes they pay. The administration and the legislature are simply going to have to take a harder line – don’t give into threats unless a corporation is willing to disclose how much they’re paying.
Cullerton and Currie do have a point about needing a better, complete picture about the state’s corporate tax revenue in order to make tax policy. While some information aggregation is possible, because of the complexity of corporate tax returns and the fact that state taxes are linked to federal returns, the Department of Revenue cannot simply cough up data on how much industry X pays in taxes.
The department doesn’t have the data or the personnel to drill down into tax returns. The comptroller can provide information about what deductions are the most costly, which is a big and important part of the picture.
If businesses want good public policy to emerge from the legislature when it comes to reforming the state’s corporate tax code, they should be ready to cooperate and provide additional data to lawmakers on a voluntarily basis.