Friday, Aug 22, 2014
Two Illinois Corporations Threaten To Leave State
HARRISBURG -- An unexpected problem is prompting the Illinois General Assembly to schedule an extra day this month. The Chicago Mercantile Exchange and Sears have threatened to leave the state unless they get a tax break.
The exchange wants a nearly $85 million annual tax break. Sears is asking for roughly $15 million a year over the next decade and a 15-year extension on other tax breaks already in place. The state is already facing the problem of trying to match its revenues with growing bills. This threat could take out almost $100 million a year out of the budget.
If lawmakers give two large corporations tax breaks, they expect other businesses will demand the same. Small businesses say they can't afford the disadvantage.
Running a successful shop takes a lot of business sense and customer service. Terry Maynard has kept the Appliance Store in Harrisburg going strong for 49 years, but a new demand from the store's biggest competitor now threatens Maynard's success.
"At this point, we've been able to compete with them, but if they continue to give them breaks, it may be that we couldn't compete with them and we would lose business," explains Maynard.
The threat from Sears and Chicago Mercantile Exchange comes after Illinois lawmakers raised income taxes on corporations earlier this year to help close a nearly $15 billion budget gap.
"It's not a matter of taking it back to the levels at the time of the tax increase, it's taking it below that. So the total amount of savings for those two businesses would be about $100 million per year," says Representative John Bradley.
"That puts us at a disadvantage," Maynard exclaims.
As a small business owner, Maynard relies on a buying group to stay competitive with chains like Sears, but he says a significant tax break for just one or two corporations would be an extremely unfair advantage.
"If they could help us some too, make it not to be such a disadvantage to us, if they would give us some breaks along with theirs, it would be perfect," says Maynard.
Bradley chairs the Revenue Committee and says he realizes the state cannot just help out these two businesses, but the threat of major employers leaving comes at the worst possible time.
"It's a tremendous amount of pressure because obviously resources are very scarce, got seven facilities that are on the chopping block in Illinois. We cut two to three billion dollars out of the budget depending on who you talk to because of the lack of resources in the state of Illinois."
Bradley says he's adamant that small businesses and middle class workers will have a say in the tax discussion, as lawmakers frantically try and find a solution in two and half weeks.
Bradley also says the Chicago Mercantile Exchange does pay a significantly higher amount of taxes, since it does all its business within Illinois. Sears, however, does not have to pay a corporate income tax, because the majority of its business is done outside the state.
Sears wants a deal like the one Continental Tire got earlier this year. The company would save money on the income tax owed by its employees.
Wind: 6 MPH
Humidity: 63 %