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February 13, 2014

A plan to cut Illinois’ corporate income tax in half to create more jobs won’t work out, according to budget expert Ralph Martire.

Illinois House Speaker Michael Madigan introduced a bill Jan. 30 to reduce the state’s corporate income tax from 7 percent to 3.5 percent.

“I am hopeful this legislation will encourage CEOs to grow their work forces with good paying jobs,” Madigan stated in a press release.

Illinois has one of the highest corporate income tax rates in the country when the 7 percent rate is combined with the 2.5 percent personal property replacement tax, which Madigan’s plan proposes to keep at its current rate. According to an analysis by the Federation of Tax Administrators, Illinois has the fifth highest corporate state income tax rate among the 44 states that impose the tax.

About $3.177 billion of the state’s General Funds in fiscal year 2013 came from the corporate income tax. Madigan’s plan to cut the rate in half thus includes an estimate of about $1.5 billion in annual savings for corporations. Madigan stated he hopes revenue committees “consider the impact this will have on business location and expansion plans.”

A reduction in corporate tax rates doesn’t ensure job growth, though, according to Ralph Martire, executive director of the Center for Tax Budgeting and Accountability.

Source: Illinois Times