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Biz blasts bill to make firms disclose Illinois income tax

Despite strong opposition from business groups, top legislative leaders said today that they’re moving forward with a bill that effectively would require any publicly traded corporation that does business in the state to disclose key details of its state income-tax return.

Final Senate approval of the measure, S.B. 282, could occur as soon as this afternoon.

In a morning Springfield press conference, Senate President John Cullerton and House Majority Leader Barbara Flynn Currie said the measure would provide lawmakers with the kind of data on who pays what — data they lacked last year, when CME Group Inc. and Sears Holdings Corp. threatened to move their headquarters out of state if they did not receive big tax breaks.

But the two made it clear that changes in tax policy — not just disclosure — may be on the way, too.

“We’re not changing any tax rates. We’re not eliminating any loopholes,” Mr. Cullerton told reporters. (Thanks to Blueroomstream.com for allowing me to tap into their video feed.) “We’re just trying to be informed, so we can make those decisions in the future.”

Ms. Currie noted that 68 percent of Illinois companies pay no income taxes at all in a given year, according to the Illinois Department of Revenue. But since the identities and details of the payers and non-players are not released, the 68 percent “may be the most profitable corporations.”

Business leaders are furious.

The proposed legislation is “insensitive, inappropriate and (an) unnecessary intrusion in tax administration,” Illinois Chamber of Commerce CEO Doug Whitley told me in an email. “It appears to me to be politically motivated.”

If the state can hold corporations up to public ridicule by disclosing confidential data, it can do the same to individuals, and doing so will not in and of itself raise tax revenues, Mr. Whitley added. “If this becomes law, it is another outrageous example of Illinois political leaders demonstrating anti-business actions. It is not rational to keep publicly flogging the job creators.”

An equally scathing review came from the Taxpayers Federation of Illinois, which is known more as a watchdog than an ideological group.

If lawmakers need more information, they can get it from the revenue department instead of demanding specific figures on each company, which will “undermine” taxpayer privacy, the federation said in a statement. Passage would make Illinois “an even less attractive state to invest and create jobs,” and give other states a leg up by pointing to Illinois’ “taxpayer climate.”

But activist groups which accompanied Mr. Cullerton and Ms. Currie at their press conference made it clear that the bill is about tax fairness as much as transparency.

“It’s about time to make sure our system is fair to everyone,” said the Rev. Marilyn Pagán-Banks, president of the Illinois Indiana Regional Organizing Network. “It’s just outrageous that most Illinois corporations don’t pay any income taxes while working folks are playing by the rules.”

Business leaders in the past have asserted that they are playing by the rules and paying what they owe. Low effective tax rates here are needed to keep Illinois competitive and spare lagging job growth here, they’ve argued.

Tax rates on individuals and companies both were “temporarily” raised last year, with the individual rate going from 3 percent to 5 percent, and the corporate rate from 4.8 percent to 7 percent.

According to a fact sheet released by Mr. Cullerton’s office (below) the bill would require the Illinois secretary of state to publicly disclose certain corporate income-tax data two years after a return is filed.

Included would have to be each firm’s net income, taxable income and tax liability before any credits, and share of its total income that is apportioned to Illinois. The disclosed data also would include a listing of non-business income from patents, royalties, rents, dividends and copyrights, and details on any loss carry-forward and tax credits.

Mr. Cullerton noted that all sides have had months to review the bill since he introduced it in the spring, and said he definitely intends to call it for a vote this week. Ms. Currie was a little less definitive, saying the House has not yet even had a hearing on the bill. “We’ll see.”

House Speaker Michael Madigan has not taken a position on the bill, his spokesman said.

Illinois Corporate Disclosure and Responsibility Act 1-Pager

http://www.chicagobusiness.com/article/20121127/BLOGS02/121129875/biz-blasts-bill-to-make-firms-disclose-illinois-income-tax#ixzz2DSEBCI9j

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