Senate Week in Review: Senate Passes Tax Exemption Package

Please note:  The Week in Review is written by a staff member of the Illinois Senate Republican Caucus and approved by legislators. It is meant to provide constituents with information about legislative action and activities during the week.

Following the Dec. 13 passage of a targeted job creation and retention package, many Illinois lawmakers are now calling for a more thorough review and possibly a rollback of state tax hikes that were passed just under a year ago.

State Sen. Ron Sandack (R-21st, Downers Grove) said the piecemeal approach that Gov. Pat Quinn and his legislative allies have taken whenever a major employer threatens to leave the state needs to be replaced by a broader and more consistent approach that will encourage job growth and reduce costs for all Illinois employers.

The latest push comes following the approval of a package of income tax exemptions and credits. Although attention has been focused on a handful of high-profile provisions, the actual components of Senate Bill 397 and Senate Bill 400 were much broader and impact many Illinois businesses.

In addition to tax changes to retain several thousand jobs at the CME Group and Sears Holding Company, SB 397 also contained a significant cut in the state's estate tax to protect family farms and an extension of gasohol tax credits that were set to expire in 2013. Other provisions that will help businesses invest and grow jobs in the state included extensions of the state's Research and Development and Investment tax credits. In addition to the two Chicago-area companies, the legislation also offered tax benefits to a downstate manufacturer of automobile filters.

While those components of the legislation had their benefits, Sen. Sandack did not support SB 397 saying that ultimately, the tax relief package for CME Group and Sears was tax favoritism for a few. 

“Rather than rolling back the ill-fated tax increase for everyone, the legislature and governor are selecting a couple of companies for preferential treatment,” Sen. Sandack said.  “We know what’s coming next—every big employer will soon be asking Springfield for their corporate tax relief, saying they are over-taxed and can get a better deal in another state.  I see a trip to Springfield becoming a fiduciary obligation on the part of all big company CEO’s, backed with a threat to leave Illinois. That will now perpetuate unless the state reforms taxes across the board and doesn’t pick and choose companies to give breaks to.”

On Dec. 14, House Republican Leader Tom Cross introduced HB 3918, a measure that would reduce the corporate income tax rate.  In response to his opposition of the tax break packages passed on Dec. 13, Sen. Sandack signed on to become the Senate sponsor of the bill, noting that this was the right first step in giving tax relief to all, not just a few. 

A second measure approved on Dec. 13, SB 400, offers an expanded credit for low-income workers through the state's Earned Income Tax Credit program and a small increase in the personal deduction for all taxpayers.

For the past year, Senate Republicans have voiced concern about both the effect of the 67 percent income tax increase and the refusal of the governor and majority legislators to come to grips with the state's massive overspending problem.

Despite the tax increase, Illinois will end the current fiscal year billions of dollars in the red. And, that is after pushing off more than a billion dollars in Medicaid costs into the next year. Senate Republicans laid out an extensive "Reality Check" austerity plan last spring, but it was rejected by the governor and Democrats, who control both houses of the legislature. See www.illinoisrealitycheck.com for the Senate Republican's plans to remedy the state's fiscal problems and create jobs in Illinois.

While most of the attention during the week focused on the business and personal income tax packages, lawmakers also unanimously approved a bill designed to correct problems created by a major cemetery reform adopted following the 2009 Burr Oak cemetery scandal near Chicago.

Senate Bill 1830 will roll back a number of regulatory requirements that proved to be particularly burdensome and costly, especially for small cemeteries. Many lawmakers expressed concerns that small public and privately owned cemeteries might otherwise be closed or abandoned.