Could Illinois do without a corporate income tax?
Of the revenue the income tax brings in, the corporate income tax accounts for about 16 percent, says Fred Giertz, an economist at the University of Illinois.
“Most economists don’t have a lot of good things to say about the corporate tax. It ends up being very complicated, double taxation, and especially at the state level, there are all kinds of possibilities about avoiding the tax by various kinds of maneuvers, most of which are legal,” he said.
Those maneuvers are especially tricky at the state level, since it can be hard to place where sales occurred or where profits were earned.
Giertz says abolishing the corporate income tax, and replacing it with perhaps a progressive income tax, which would require a constitutional amendment, is politically unlikely.
Doug Whitley, president of the Illinois State Chamber of Commerce, says corporate income taxes tend to be“symbolic.” He says if the tax were phased out, repeal might produce enough economic growth that no new revenue source would be needed to replace it.
In Fiscal Year 2011, the state collected $12.4 billion in individual income tax, and $2.3 billion in corporate income tax. The state also collected $1.39 billion in personal property replacement tax, which is added to corporate income tax. (SOURCE: Illinois Department of Revenue http://tax.illinois.gov/Publications/AnnualReport/2011-Table-1.pdf)
(Posted 10-26-2012 at 11:29am, Illinois Radio Network)