House Republicans caution that progressive tax plan will drive more businesses out of Illinois
State House Republicans gathered last month in Springfield to explain why the graduated income tax structure Gov. J.B. Pritzker is pushing to replace the current flat tax system will drag the Illinois business community even further down the scale than it already is.
Rep. Brad Halbrook (R-Shelbyville) said Illinois businesses are currently doing all they can do to manage, but the worsening anti-business climate continues to force more of them to leave the state or close altogether.
"Pioneer Oil worked with local officials to do some things and there was some resistance," Halbrook said at the press conference. "They moved across the river into Indiana. Indiana did a lot of things for them. They wanted a more viable entity in Illinois and it fell on deaf ears."
Rep. Dan Caulkins (R-Decatur) told press conference attendees that The Libman Company is another living example of what will happen if Illinois adopts the new tax structure, also called a progressive income tax.
"Mr. Libman is being bashful of the importance of his company — they employ 650 people in a small town in Illinois and it produces almost $1 million in property taxes to that town and company," Caulkins said. "He is the perfect example of who will be poached from this state. This progressive income tax, if adopted, will only make his choice to leave easier."
The Libman Company has been in Illinois for more than 100 years. Andrew Libman, president of The Libman Company, said the new minimum-wage law is already going to add a lot of dollars to the company's costs, and the new tax structure may push it over the top.
"We can’t move our manufacturing to other states because of costs," Libman said. "It’s important where we’re at that we can remain competitive. It will add millions of dollars of cost to our bottom line. Capital that we usually use to reinvest in our business will now go to taxes."
"This $3.4 billion tax increase from Pritzker — if you don’t think that won’t have an impact, you’re looking at the wrong state," Rep. Tom Demmer (R-Dixon) said at the press conference. "It would put pressure on businesses across the state."
Demmer said House Republicans have been working on a budget for the next fiscal year that shows a balanced budget can be achieved without tax increases.
"We do not need to be blackmailed by cuts to pass tax increases on Illinois," Demmer said.
Rep. Allen Skillicorn (R-Crystal Lake) said a company in his district has recently decided to give the option to employees to leave Illinois and go to another manufacturing plant in another state.
"This is happening all over Illinois," Skillicorn said. "These are American jobs. They are Illinois jobs. They are jobs that matter."
Skillicorn said Illinois needs reform before it needs more taxes.
"There are efficiencies that we can have that we have not exploited," Skillicorn said. "Business environment and tax rates go hand-in-hand. Our own state is benefiting from President Trump’s tax cuts. If we’re going to do a $3.4 billion tax increase on Illinois, it will have a dire effect."
Rep. Chris Miller (R-Robinson) said that when Democrats talk about making things fair, that means more taxes are coming.
"I have a problem when we penalize achievement," Miller said. "We want to penalize people who have been successful. The estimate is we're going to tax $3.4 billion out of responsible hands and put them in irresponsible hands."
Senate Joint Resolution Constitutional Amendment 1 passed the House last week with 73 Yes votes and 44 No votes, bringing the progressive income tax one step closer to law. It will now be on the November 2020 ballot for Illinois voters to decide.
Every single Republican voted no on the bill and many businesses and individuals have spoken out against it. Pritzker has been adamant about his preference for what he calls a "fair tax" since running for governor last year.