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FOR IMMEDIATE RELEASE
May 8, 2007
Governor Blagojevich applauds Senate committee for passing historic Tax Fairness Plan that will invest record new funding for education; also will expand healthcare and provide property tax relief
Plan amended to provide even more protection for small businesses; new tax credit means more than 90% of businesses exempt from GRT
SPRINGFIELD – Governor Rod R. Blagojevich today commended the Senate Executive Committee for passing historic Tax Fairness Plan that will invest record new funding for education over the next four years and help relieve the tax burden of hardworking families. Senate Bill 1 would usher in a sweeping transformation of the state’s tax system to shift the burden away from middle class families who have shouldered an increasing share of taxes over the past thirty years, while many of Illinois’ largest corporations have paid little to no income tax. The Senate included an amendment that provides a tax credit for businesses that employ workers in Illinois, further protecting small businesses that fuel the state’s economy.
“For far too long, big businesses have been able to avoid paying their fair share for healthcare, education, infrastructure and other services because of a tax system that is outdated and littered with corporate loopholes. Today, senators took an important step forward to correct inequities in the current tax system to make large corporations pay their fair share so we can better educate our children, give everyone access to affordable healthcare, and provide working families with property tax relief. This plan – unlike others being discussed – accomplishes our goals without hitting the pocketbooks of the hardworking people we want to help,” said Gov. Blagojevich.
Senate Bill 1 includes the Governor’s Helping Kids Learn plan, which boosts education funding by an unprecedented $1.5 billion in Fiscal Year 2008 and more than $10 billion over the next four years – nearly three times bigger than any increase in state history. Under the plan:
• General State Aid to schools will increase by $800 million to $6,058 per student;
• An increase of $200 million will boost the state’s reimbursement rate for special education teachers – the first increase districts have seen since 1985;
• An increase of $153 million will fully fund ‘mandated categorical’ programs like special education and transportation;
• An additional $69 million will accelerate implementation of Preschool for All and additional resources will be made available for school districts to offer full-day kindergarten;
• Underperforming schools will share in $100 million in new support for after school tutoring, curriculum and textbook enhancements, longer school days or other proven strategies that raise student achievement;
• And Illinois’s deteriorating schools will find relief in a $1.5 billion capital construction plan for projects to improve and upgrade classrooms and schools.
The legislation also would give the state a solid, dependable revenue stream moving forward to Invest in Illinois Families with $7.6 billion that will also provide:
• “Illinois Covered” – an affordable, reliable healthcare plan to cover the 1.4 million uninsured adults in Illinois and provide assistance to millions of middle-income families and small businesses struggling to keep up with health insurance costs;
• Statewide property tax relief to alleviate costs that have escalated as a result of the state neglecting its primary funding obligation; and,
• Investments in the state’s transportation infrastructure through a $3 billion bonded capital road program.
In his Budget Address on March 7, the Governor proposed paying for his bold new initiatives through his historic Tax Fairness Plan. Even though large corporations enjoy the benefit of state services such as education, healthcare, roads, public safety and public transportation, individual taxpayers carry 88% of the burden of paying for them – despite the fact that corporations are posting record profits. The proposal would replace the flawed and broken Corporate Income Tax (CIT) with a more evenly-applied Gross Receipts Tax (GRT).
Under the Governor’s plan passed out of the Senate Executive Committee, all businesses that generate less than $2 million in revenue will be exempt from the GRT. The legislation approved in committee today also includes an Illinois Job Tax Credit for businesses employing workers in Illinois. The tax credit will allow Illinois companies to offset their Gross Receipts Tax based on the number of employees in Illinois. Goods-producing companies that have and retain jobs in Illinois would get an annual tax credit of $2,000 for each full-time job (the equivalent of 1,500 work hours per year) up to $50,000, while service-based companies would get a tax credit of $2,000 for each full-time job up to $100,000. When including the new Illinois Job Tax Credit, which helps all businesses, especially the small businesses that generate many of the new jobs in Illinois, then most businesses with less than $5 million in revenue in Illinois will not be impacted by the GRT – more than 90% of all businesses in Illinois.
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