Illinois House Republicans believe Governor J.B. Pritzker should re-think a tax plan that could effect small business owners this Spring. 99th District Representative Mike Murphy, who is a former family restaurant owner in Springfield, says he was glad that the decoupling tax bill that would have caused Illinois’ income tax to undo the federal tax bracket failed during the General Assembly’s lame duck session in early January.
Murphy says that the decoupling bill would have been a major tax increase: “In the final hour of the lame duck session, Governor Pritzker attempted to rush legislation through the General Assembly that would have amounted to a tax increase estimated at anywhere between $500 million to $1.4 billion. That legislation would have decoupled Illinois income tax from a federal provision in the federal CARES Act passed last Spring to provide support to small businesses hit hardest by COVID-19 by allowing them to deduct additional losses in 2020. Thankfully, the legislation failed to pass during the lame duck session.”
Murphy says that Pritzker hopes to push through similar legislation when lawmakers return to session this Spring. Murphy says that the bill, along with other measures implemented by the governor, will continue to kill small businesses still reeling from the impact of COVID-19: “This is on top of the governor already dealing a serious blow to struggling businesses by not implementing the Blue Collar Jobs Act at the beginning of January and the ongoing shutdown due to his executive orders. I cannot adequately express how damaging this is going to be for our struggling small businesses, so many of which are already on the brink of collapse.”
Murphy says that nearly 400,000 businesses in the state would be impacted by the decoupling bill, further causing distress to their ability to operate and even remain open. Murphy thinks it will also drive many other businesses out of state.
Following the GOP press conference at mid-day last Friday, Governor J.B. Pritzker responded to the criticism during the Q&A session during his COVID-19 press briefing: “I think what the Republicans misunderstand is that the former Senate Majority Leader Mitch McConnell and the former President Donald Trump pushed for legislation giving a massive tax increase to some of the largest businesses, and what they also did was effect state revenues across the United States, which is why 26 states have put through decoupling and an additional 9 states already were automatically decoupled, and their are other states that don’t have an income tax were not effected by decoupling. So, it’s actually really, fairly a standard movement by states to make sure that they are decoupling and we are going to do the same. The Republicans, we are now 81 days since Election Day. They have not proposed any cuts to state government, any way to balance the budget, and now they are proposing blowing perhaps a half billion dollar hole in next year’s budget.”
Pritzker has promoted the decoupling measure to help close a $3.9 billion general fund shortfall for FY2021, which ends July 1st. Republicans say they have not returned a budget proposal because they are still awaiting figures from the Pritzker Administration about how much money the state is allegedly going to save from his requested 6.5% cuts in state departments that was announced in December.