By and large, America’s small business community is feeling good about the direction of the country.
According to the latest survey results from my association, the National Federation of Independent Business, small businesses' optimism remains at historically high levels.
Here in Illinois, though, small business owners are feeling far less upbeat.
Any optimism that NFIB’s Illinois members feel has been throttled by a host of bills that the General Assembly passed in 2019. They include more than a dozen new tax and fee hikes, a $15 per hour minimum wage, and a slew of new employer mandates.
Despite the rosy picture Gov. J.B. Pritzker tried to paint in last month’s State of the State Address, Illinois a financial wreck. We have a $3.2 billion budget deficit, $6.2 billion in unpaid bills, and $137 billion in unfunded pension liabilities.
Meanwhile, the governor and his allies are trying to build support for a state constitutional amendment to allow for the implementation of his progressive income tax plan. They call it a “fair” tax, but we might rather think of it as “fair-y tale.” While it promises wondrous things, something Grimm awaits.
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Small business owners understand that the General Assembly has to address Illinois’ financial calamity, but raising taxes without making major spending reforms won’t make things better.
If approved by voters in the November election, Gov. Pritzker’s progressive tax is going to harm small businesses and their employees.
It would eliminate the state constitution’s flat tax protection and create multiple tax brackets and rates. That means the more you earn, the higher your tax rate. And unlike our current tax law, the income brackets and tax rates could be changed by a simple majority any time lawmakers feel the need to increase revenue. For example, look up Connecticut's income tax.
Based on past experience, there’s a real concern that the General Assembly will continue to pass tax increases in the coming years so they can keep spending on new programs without fixing the deficit.
Under related legislation, corporate income would be taxed at a flat rate of 10.49%, while the top bracket for pass-through business income — which would include most of the state’s small businesses — would be taxed at 9.49%.
In the real-world higher tax bills mean less money to grow businesses, give raises, add benefits, or hire additional workers. Small business owners and their employees should remind themselves of this when they cast their votes in November.
Our elected leaders have misled us before. They’ve told us that raising taxes will solve the state’s financial woes. It hasn’t, and it won’t. On the contrary, Illinois’ financial situation has only gotten worse as lawmakers have kept spending. The progressive tax is just another way for government big spenders to get their hands on more taxpayer dollars. We can’t afford to fall for Gov. Pritzker’s “fairy tale.”
Mark Grant is the National Federation of Independent Business’ state director for Illinois.