Mar 16, 2007 12:58 pm US/Central
Gov. Tells Small Businesses Not To Worry About Tax
Some Business Leaders Don't Believe It
SPRINGFIELD, Ill. (AP) ―
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Gov. Rod Blagojevich presenting the state budget in Springfield earlier this month.
CBS
Hundreds of thousands of small businesses across Illinois received letters from Gov. Rod Blagojevich this week addressing what he called misinformation about his proposed $6 billion business tax.
But business leaders say the governor's letters are misleading.
The letters say businesses with less than $1 million in revenue are "exempt from the revised tax structure. This means that 75 percent of all businesses in Illinois will see no or little change in their taxes."
Blagojevich claims in the letters that "loud voices in Springfield" are wrongfully saying that his "plan is bad for business and that your taxes will go up."
In his annual State of the State address and budget proposal last week, the Chicago Democrat called for a $1.5 billion increase to education funding and a new health program extending health insurance to everyone in the state.
Blagojevich said he would pay for it with $7 billion in new taxes, including a $6 billion "gross receipts tax" on most kinds of business transactions. In exchange, the corporate income tax would be phased out in four years. He described the tax as beneficial to small business because many would be exempt.
But Connie Beard, an official at the Illinois Chamber of Commerce, said Friday that some small business owners Blagojevich says would be exempt from the gross-receipts tax are under the mistaken impression that they would pay no taxes when the corporate income tax is phased out.
She said a top Blagojevich aide, John Filan, told her that small businesses would pay the gross-receipts tax after the income tax phase-out, either applied at a lower rate or at a fixed amount.
Blagojevich spokeswoman Becky Carroll said Filan simply was discussing possible options and that the administration plans to get comments from small business owners on which tax system they would prefer.
The Chamber strongly opposes the gross-receipts tax, claiming it would cost the state jobs. Beard said it would amount to a tax increase for the business community because it would tax every dollar brought in, with no deductions or credits, even if a business did not make a profit.
A call to Blagojevich's office was not immediately returned Friday morning.
Advocates for small business also saw the letters as misleading.
"The very business owners he's trying to placate here are just furious about these letters. They are tired of the lies, said Kim Clarke Maisch, state director for the National Federation of Independent Business.
The 345,000 letters cost $110,000 of taxpayer money in postage and supplies, according to Andrew Ross, a spokesman for Illinois Department of Commerce and Economic Opportunity.
(© 2007 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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