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Lawmakers: State needs tax fairness, not one-at-a-time relief

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SPRINGFIELD — If Illinois lawmakers are going to help one or two businesses in the Chicago area deal with high tax bills, some lawmakers say they should help businesses in the rest of the state as well.

By Benjamin Yount

SPRINGFIELD — If Illinois lawmakers are going to help one or two businesses in the Chicago area deal with high tax bills, some lawmakers say they should help businesses in the rest of the state as well.

Tuesday night's defeat of a $325 million tax relief package for CME Group and Sears Corp. came amid complaints that all Illinois businesses — not just those with big names or big-name lobbyists — should get some help.

The tax proposal began as a means to keep the company that owns the Chicago Mercantile Exchange and the Chicago Board of Trade, CME Group, and Sears from following through on threats to leave the state if Illinois doesn't lessen their tax burdens by the end of the year.

The companies said they'll to move to states with better tax incentives.

State Rep. Rich Brauer, R-Springfield, said the 99 votes in the House against the tax break package are telling.

"It shows how (the January) tax increase effects businesses, how much of a burden it is when they're talking about moving out," Brauer said. "But it's not just big businesses. It's all businesses."

Instead of tackling business tax complaints one at a time, Brauer said Illinois needs to roll back the 47 percent increase in the corporate income tax rate and rewrite the tax code.

None of the 78 Republicans in Springfield voted for the 67-percent personal income tax increase or the corporate tax rate hike earlier this year. Both measures passed with only Democratic support.

But now some Democrats at the statehouse are talking about changing Illinois' tax code. State Sen. Toi Hutchinson, D-Olympia Fields, lead a series of hearings during the summer aimed at finding a better system.

"There needs to be comprehensive overhaul of the entire tax code," Hutchinson said, "because it's not 1911, it's 2011."

Hutchinson said Illinois' economy has outgrown the tax code. She is quick to point out that 60 percent of all corporations in Illinois do not pay the state's corporate income tax because of deductions or loopholes.

CME's chief complaint to lawmakers was that it pays far too much in corporate income taxes. The company's $108 million tax bill for 2010 accounted for nearly 6 percent of all corporate income tax revenue.

Tom Johnson, executive director for the Taxpayer's Federation of Illinois, a tax watchdog group, said CME may be correct.

"CME is saying that they are being discriminated against because of the tax code," Johnson said. "They are saying they pay more for having a global presence than some other Illinois companies. And I think they may have a point."

But Brauer added that CME is not the only large company in Illinois that would like to lower its costs.

"Once we start with this, look at where it's going to lead," Brauer said. "We're going to have all corporations of any size that are going to say, 'I need tax breaks, or I'm leaving also.'"

But the situation Brauer described is happening already.

"We have West Quincy, Mo., right across the bridge. It doesn't have many residents, it's just businesses that sell cigarettes and gas. All of those kind of commodities that are less expensive in Missouri," state Rep. Jil Tracy, R-Quincy said. "No residents. Just businesses that are feeding off of Illinois dollars."

Tracy said if Illinois is going to hand out breaks to big businesses, it needs to do the same for all businesses.

But it is not just a rollback or a rewrite. Johnson said Illinois lawmakers need to look at the bigger picture.

"The frustration is not just the tax code," Johnson adds. "Illinois simply does not have a fiscal plan."

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