Originally Posted Online: Oct. 23, 2012, 12:59 pm
Last Updated: Oct. 23, 2012, 1:03 pm
Smiddy: On state finances
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By Mike Smiddy
Our representatives need to be smarter about how the state does business. My opponent's proposal regarding Thomson prison is an example of where Springfield needs to make better decisions.
He suggested that it was a "necessary step" to give Thomson to the federal government for free and co-authored a proposal outlining the giveaway.
Thankfully, Rep. Rich Morthland's proposal was rejected, Thomson was sold at a fair price, and Illinois received a check for $165 million.
If Rep. Morthland's plan had become reality, Illinois would be $100 million poorer. This type of shortsighted, fiscally irresponsible decision needs to take a backseat to common sense and basic financial management. Illinois simply can't afford any $100 million giveaways.
We also need to take a look at what Springfield is spending on corporate welfare, like the Sears and Chicago Mercantile Exchange deals, that takes millions out of state coffers. My opponent voted to give Sears an $80 million tax break. Sears responded by closing stores and laying off employees across the state. It was a terrible investment for taxpayers. We need to be smarter about where our tax dollars go.
CME is the world's largest derivatives marketplace -- the place where commodities traders and financiers make their living. If Illinois can't afford to help low-income seniors purchase life-saving prescription drugs via the Illinois Cares Rx program (which was recently eliminated), we certainly can't afford to subsidize a wealthy stockbroker's second BMW. We need to save our tax breaks for middle-class families and small businesses.
Giving special treatment to large companies at the expense of the taxpayer and to the disadvantage of small business just isn't good economic policy. Eighty-five percent of employers in our district have 100 employees or less -- these are the businesses that create the most growth and need our attention.
The Responsible Budget Coalition has identified five corporate tax loopholes that take nearly $696 million out of the pockets of Illinois taxpayers. For example, if Illinois were to stop exempting dividends paid by foreign corporations to their U.S. parent companies, state revenue could increase by $320 million-$386 million. Since these companies don't pay state taxes on foreign dividends, this loophole actually incentivizes companies to leave the country. This is a loophole most people in Illinois have never heard of and will never benefit from -- removing it adds hundreds of millions in revenue and helps keep good jobs in Illinois. In aggregate, eliminating this loophole and just four others could help Illinois pay nearly $700 million in outstanding bills.
With these steps -- better financial decisions, less money poured into corporate tax breaks and ending egregious and unproductive corporate tax loopholes -- Illinois will have the money it needs to pay its vendors, school districts, police and fire personnel and other financial obligations.
I believe that the state income-tax increase needs to expire when it is scheduled to do so. Illinois must keep the promises it makes to its citizens, its taxpayers and its businesses. This increase disproportionately harms small businesses which don't have access to the huge tax breaks that large corporations often receive.
Mike Smiddy, of Hillsdale, is the Democrat candidate in Illinois House District 71.