SPRINGFIELD, IL (AP) – Governor JB Pritzker on Friday proposed changes to Illinois tax law that would save the state $ 500 million during a budget crisis.
The Democrat has also frozen the start of new business loans that would cost $ 20 million annually.
Pritzker launched the idea on the first day of the General Assembly’s lame duck session, one of five days that the 101st General Assembly was supposed to close before the 102nd inauguration on Wednesday.
Illinois is hit by the COVID-19 pandemic and has a budget deficit of $ 3.9 billion. Pritzker hoped to recoup some of that by approving a tiered income tax that would tax the rich at higher rates and generate $ 3 billion more a year. But voters firmly opposed this constitutional amendment in the November elections.
Pritzker has threatened a widespread hike in income tax that would hit all taxpayers, or 15% cuts in broad-based services, none of which he has pushed, though Pritzker has decided to cut some spending.
“The recently announced budget cuts along with these new rollbacks of corporate tax breaks are just the first steps in this budget process. More will be needed, ”said Pritzker in a statement. “We need to look into other corporate tax breaks and possibly roll them back – including those that have been on the books for many years.”
The biggest step in the governor’s current plan would be to decouple Illinois tax law from federal law. As part of its COVID-19 aid package last spring, Congress changed the way federal tax law deals with net operating losses and excessive business losses. Illinois tax law is bound by these sections and would automatically reduce Illinois tax revenues by $ 500 million. Due to the decoupling, the applicable law remains.
But House Republicans said the federal corporate tax cuts were exactly the relief Illinois corporations need after an economic defeat from COVID-19, which temporarily shut down much of the economy last year.
“This is the CARES federal law that has widespread bilateral support and support for COVID relief and the governor is proposing to take that aid out of business,” said Rep. Avery Bourne, a deputy Republican leader Morrisonville. “This is just the latest in a series of proposals from the governor (and) small businesses in our region that have not received much relief.”
Pritzker noted that his government has provided “small millions of dollars in support” to small businesses through federal COVID-19 aid to Illinois.
The trade tax credits were incorporated into the law in 2019 and are due to come into force on January 1st. They allowed companies that had already received credits for the Illinois move and expansion to apply for additional credits based on the wages paid for this construction work, up to $ 20 million.
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