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Dealers, employees must act against perilous gross-receipts tax

November 17, 2010

Illinois Gov. Rod Blagojevich’s 2008 budget proposal, which relies on the biggest tax increase in state history, would be the final coffin nail for many dealers struggling lately to survive, industry analysts said.

 

Included in Blagojevich’s plan to raise $32 billion in new revenue is the creation of a gross-receipts tax that would tax all business transactions, regardless of profitability. Businesses across the state have railed against the plan since it was announced earlier this month. 

Some analysts said the new tax could put hundreds of Illinois dealers out of business. Other business groups said their members would be forced to another state.

 

Directors of the CATA, at a March 19 board meeting, debated joining a coalition of business groups to campaign against the gross-receipts tax. Bankrupting businesses, they argued, does not improve the state’s health. Indeed, a shuttered company increases the rolls of unemployed citizens without health care insurance. 

The CATA is mailing dealers a worksheet for them to calculate how much a gross-receipts tax would impact them. Dealers could turn to their state lawmakers with real numbers about the impact, in appealing for the General Assembly to derail Blagojevich.

 

The CATA mailing also will contain sample letters that dealers and their employees can use in approaching their lawmakers on the issue.

 

Blagojevich has pitted his campaign for new taxes in a good-versus-evil light, with individuals burdened by taxes that big corporations avoided paying. But most businesses would pass along any tax increase to consumers anyway. And dealerships and other industries that operate on slim margins, like grocery stores, would be devastated, perhaps into bankruptcy.

 

The Illinois Chamber of Commerce calls the gross-receipts tax "a reckless and irresponsible affront to every employer and worker in Illinois." The chamber also urges employers and employees to communicate their concerns to legislators about the gross-receipts tax and another proposal to tax businesses that don’t offer health insurance or that offer minimal coverage.

Illinois Senate President Emil Jones (D-Chicago) immediately indicated supported for new tax levies on businesses, when Blagojevich announced his plan March 7. House Speaker Michael Madigan (D-Chicago) has not stated his position on the gross-receipts tax.

 

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