Jumping Through Loopholes
By Kevin Robinson in News on Feb 22, 2007 2:50PM
We here at the Chicagoist offices follow the news so you don't have to. Sometimes that means sifting through press releases, reading other news outlets, or keeping our ear to the ground. One thing we've been keeping an eye on here is the "education situation" in this state, with all its sick twists and turns. Tax "reform" and education have been quite the issue this winter, with Governor Blagojevich promising not to raise taxes, while also promising to figure out how to fund education in the state at a deeper level (to stave off a gubernatorial challenge from State Senator Rev. James Meeks).
Maybe that's why Blagojevich is planning on rewriting the state's corporate income tax in the most sweeping way since the 1970's. The governor's office is putting final touches on a bill that would scrap the state's current corporate income tax in favor of a plan to collect a levy on the gross receipts of all businesses. Crain's Chicago Business notes that 37 of the “Fortune 100” companies didn’t pay any income tax in 2004, "despite average Illinois sales that year of more than a billion dollars." But the education angle is what makes this story so much more interesting. Blagojevich is under quite a bit of pressure both to relieve taxes in the state and to find a better source of funding for education here. Daley, Madigan, Meeks, Emil Jones and others have all supported HB/SB 750, which includes what has come to be known as the tax-swap. This piece of legislation would increase the income tax rate from 3 percent to 5 percent, and reduce school property taxes by about 30 percent. This would effectively bolster aid to public schools while eliminating reliance on local property taxes that create disparities between wealthy and poor school districts. Blagojevich has vowed to veto this bill should it come to his desk.
And here is where it starts to get interesting. Blagojevich quietly moved his combined State of the State and budget proposal address to March 7. And yesterday the Illinois Board of Education released its Fiscal Year 2008 budget (you can read the PDF here), and is asking for an additional $800 million over this year's budget. You can bet that they wouldn't be asking for that kind of increase without getting the blessing from the governor's office first. G-Rod must feel pretty confident that he will get his new tax plan this session, and be able to beat back the aforementioned power-brokers, wihtout appearing to raise taxes on "regular people" and finding even more money for school children. We don't think that selling the lottery is going to happen; that idea will be dead in the water before it even hits the Statehouse. And we're pretty sure Blago knows this. With so many power hitters lined up for reform, and the monetary pressure building, it may be easier to try to stick the tax bill to businesses than to institute real tax equity in Illinois. At least for now.