Ill. lawmakers move bill forward that could hike taxes on small businesses
SPRINGFIELD, Ill. (WIFR) - A bill that could hike taxes on 440,000 small businesses across the state moved forward in the General Assembly today. The House Executive Committee voted 9-6-0 to pass Senate Bill 217, which insiders believe will be the vehicle for the $1 billion small business tax hike the governor has championed since January.
The bill is primed to be amended, pass the House and Senate, and sent to governor for signature tomorrow, all in one day.
It would undo federal legislation intended to help struggling businesses retain employees and weather the economic storm that accompanied the COVID-19 pandemic, according to the nonpartisan Illinois Policy Institute. Meanwhile, small businesses have created 60% of Illinois’ net new jobs in recent years.
How “decoupling” hikes taxes:
- When the economic shock of COVID-19 and state-mandated lockdowns hit, businesses faced massive losses and a lack of cash to pay their staff, rent and other bills. The federal Coronavirus Aid, Relief and Economic Security (CARES) Act let businesses apply 100% of their lost income to past years, rather than only future years. This process is known as a “carryback” of net operating losses for businesses.
- A “carryback” would allow a struggling business to take a refund for excess taxes already paid based on its loss of income. This more immediate adjustment allows for additional cash on hand to pay bills and could prevent some businesses from shuttering. That’s because businesses wouldn’t have to wait a full year for their tax bills to be adjusted.
- During “lame duck” session, the 101st Illinois General Assembly rejected Pritzker’s call to decouple state tax policy from the CARES Act.
Bryce Hill, senior research analyst at the nonpartisan Illinois Policy Institute, offered the following statement: “2020 was one of the worst years on record for the state’s economy, and Illinois’ 440,000 small businesses felt this pain more than most. Taking away $500 million to $1 billion intended to help them stay afloat during COVID-19 and get an advance on their future tax returns would do more damage to small business owners and the jobs they help create. Plus, this won’t fix Illinois’ spending problems. Lawmakers should reconsider this bill.”
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