Tuesday, November 27, 2012

Corporations' tax information could become public knowledge

By Jamey Dunn

Some Illinois lawmakers want to look at corporations’ income tax bills, but business groups say it would violate their privacy.

Senate President John Cullerton said he plans to call Senate Bill 282 for a floor vote this week. The measure would require publicly traded corporations that do business in Illinois to share tax information, such as their incomes, tax liability and tax credits they receive. The information would not be made available to the public until two years after it was filed with secretary of state. At that time, it would be available to the public through a searchable online database.

Cullerton and the bill’s House sponsor, Chicago Democratic Rep. Barbara Flynn Currie, said at a news conference today that lawmakers need the information to make informed decisions about tax policy. “So we have to educate people on where we get our money and where we spend our money,” Cullerton said, “because when we have tough times like we’ve had, people just say, you know, 'Cut the waste,' and, you know, 'Get rid of the fraud.’ Well, fine. But in the meantime, we’ve got to balance a budget, and so being able to know where the money comes from is really important.”

Business groups say sharing such information could expose them to their competitors. “You may have two publicly traded companies that make the same kind of product. If one of those companies is having tax problems and the other one is not, that’s a huge competitive advantage for knowing that,” said Mark Denzler, vice president and chief operating officer of the Illinois Manufacturers Association.

The measure would apply to all corporations that do business, such as selling products in the state, not just those that are based here. Cullerton said it is unlikely that the bill would spur any businesses to leave the state because they would still have to disclose the information if they wanted to conduct business in Illinois.

Community groups backing the bill argue that in tight times, all decisions that affect revenue deserve scrutiny. They say that some corporations are not pulling their weight when it comes to paying taxes. “This information is crucial for us to responsibly balance our state budget in way that ensures a better future for all of us. Our state simply cannot afford to excuse two-thirds of its corporations from paying their fair share without even knowing if they can afford to do more,” said Tony Pierce, board president of Bloomington-based Illinois People’s Action.

The Illinois Department of Revenue estimates that two-thirds of corporations in Illinois do not pay any corporate income tax. However, they do pay other taxes, such as sales and property taxes. “Let’s face it: There are very very few taxpayers in Illinois who don’t try and minimize their tax bill. I certainly do it. I’ll admit it. I take all those exemptions, and corporations, they want to pay what they owe but not anything more,” said Todd Maisch, vice president of government affairs for the Illinois Camber of Commerce. “Especially coming out of the great recession, when we had a number of prominent Illinois businesses [that] only still exist because they were able to go through banks, it’s not surprising that you would have a fairly large number [of business that do not pay income tax].”

Currie and Cullerton both said that the measure is not an effort to increase the tax rate on corporations but an attempt to make lawmakers and the public more informed. “Two words are very popular in politics these days: transparency and accountability. Senate Bill 282 fits that profile,” Currie said. “Public policy makers can’t make good public policy if they don’t know what’s going on.”

However, Currie said that if the information shows that companies making big profits are not paying corporate income taxes, “maybe we should say that their full share is not zero.”

Business organizations say that if the proposal becomes law, it would send a message that the state is not friendly to development. “Will people go ahead an pick up and move their companies or move out of Illinois market because of this?” Maisch asked. “You know, I don’t know. There is a cumulative effect. Think about all the things that have happened, and this is one more thing that points in the wrong direction. ... The most likely impact is the invisible investment that didn’t happen.”

If SB 282 passes in the Senate, it will then go to the House for consideration.

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