However, corporations, especially large corporations, are being burdened with $ 932 million in proposed higher levies – or “closing corporate loopholes” as the governor and his advisors put it. And that number could grow.
On the block is the net operating loss allowance, which would be capped at $ 100,000 per year and would bring in an estimated $ 314 million for the fiscal year beginning in July. Align the tax treatment of foreign-sourced dividends, which many large corporations earn, with the tax rate on domestic dividends, estimated at $ 107 million; and withdrawal of the accelerated depreciation clause on companies valued at $ 214 million per year.
Officials said all three were merely reversing tax law changes that former President Donald Trump pushed through in 2017 because of near-unanimous democratic opposition. The proposed changes effectively roll back those changes as they affect state taxes.
Also planned is a planned acceleration of the exemptions for the use of biodiesel fuel by USD 107 million. a sales tax credit that manufacturers receive for purchases of non-machine items; and $ 30 million in corporate income tax, which has been repealed but which Pritzker plans to reintroduce.
In one particularly noteworthy move, Pritzker suggests capping the fee retailers receive for collecting state sales taxes to $ 1,000 per month. This would exclude many small businesses but would affect large chains. And he wants the state’s tax credit on private school grants back to 40 percent, down from 70 percent.
The Corporations tab could continue to grow – hundreds of millions more – if the governor manages to revive his bill to break away from a provision in the latest federal COVID relief bill that allows corporations to turn losses now with profits offset in the past and thereby receive tax refunds.
“If there is something that the last year should have taught us, we need a reliably well-funded government,” said Pritzker in his budget speech, referring to the medical and financial response to the pandemic. And these programs need to be funded, even at a reduced level, he continued.
In his speech, prepared for delivery, Pritzker stated that his administration had done everything possible to help small businesses deal with COVID and said he would keep trying.
“While the federal government issues billions of checks to big businesses, here in Illinois we’re advocating for small businesses – or as I like to say – the big businesses of the future,” he said.
Pritzker did not directly point out the loss of his proposed tiered income tax in a referendum in November.
In total, proposed new budget projects using the general funding will be around $ 1.8 billion less than this year. However, this is mainly due to the fact that the state will no longer borrow from the Federal Reserve to help weather the pandemic and has actually repaid about a quarter of the $ 3.2 billion it borrowed.
Local tax revenues were actually significantly higher than expected during the pandemic. However, this is partly due to the fact that the filing of income taxes has been delayed and the revenue that would normally have been received last year has been received this year.
Although state subsidies for elementary and high schools, as well as for higher education, won’t increase for the second year in a row, Pritzker said education gained from the federal COVID stimulus programs. The state under the proposed budget would increase some spending on social services such as the Department of Child and Family Services.
The proposed budget will fully finance the statutory amount for the state employee pension. However, this amount is billions of dollars per year below the actual required level, which means that the net pension liability is growing every year.
If President Joe Biden is able to pass his proposed $ 1.9 trillion COVID stimulus plan, Illinois equates to $ 7.5 billion, with local governments getting almost that much again, according to Congressional sources. Officials said some of that money may be earmarked for specific expenses, but their first priority will be repaying the Federal Reserve and reducing the state’s backlog of more than $ 4.5 billion in unpaid funds