Public News Service: Report Highlights Illinois Companies Dodging State Taxes
media mentionMarch 20, 2014
SPRINGFIELD, Ill. – Illinois may have the fourth highest corporate tax in the nation, but it turns out that not all businesses are actually paying it.
Several Illinois-based companies are on a list of profitable Fortune 500 companies that paid zero state income tax in at least one year from 2008 to 2012.
A study was released today by Citizens for Tax Justice and the Institute for Taxation and Economic Policy, whose executive director Matt Gardner says companies are able to dodge state taxes through loopholes, giveaways and crafty accounting.
“The fact that so many companies are finding ways to zero out their tax at a time when middle-income families don’t have that luxury should prompt lawmakers in every state to ask hard questions about what tax breaks these companies are claiming and whether these tax breaks ought to be reformed or eliminated,” Gardner says.
According to the report, Dover, Exelon, Integrys Energy Group and Boeing avoided paying state income tax for two of the five years examined in the report.
Meanwhile, there are efforts at the statehouse to reduce Illinois’ corporate tax rate to 3.5 percent, down from its current 7 percent level.
Some claim that corporate tax cuts naturally pay for themselves, but Gardner says there is very little evidence that tax breaks and incentives create economic growth.
He says at some point, others will shoulder the burden.
“You can’t think about the economic impact of a corporate tax cut all by itself,” he points out. “You also have to think about the economic impact of the spending cuts or the other tax hikes that are going to be necessary to pay for it.”
The report recommends the adoption of a minimum tax to ensure every profitable company pays at least some income tax, as well as required disclosure of corporate tax payments so state lawmakers know whether companies lobbying them for tax breaks are paying any income taxes to begin with.