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posted: 3/11/2014 5:01 AM

Businesses need a fairer Illinois income tax

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  • Mark Garrity

      Mark Garrity

  • Steve Purduski

      Steve Purduski

 
By Steven Purduski and Mike Garrity

Small businesses are the backbone of Illinois' economy. They create two out of every three new jobs in this country and account for nearly half of all jobs throughout Illinois. Small businesses put money in the hands of the middle class, employing 2.4 million workers in Illinois who, in turn, buy the products and services that grow our demand-driven economy.

Springfield politicians seem to understand neither the economic imperative of promoting small businesses nor the policies that would do so. Instead, they cling to a broken status quo characterized by continued cuts to public education and infrastructure and wasteful tax giveaways to big corporations.

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These misguided policies constrain Illinois growth and job creation while putting small-business owners like us at a competitive disadvantage against both businesses in surrounding states with a fair tax, or graduated income tax, and big Illinois corporations that avoid paying their fair share.

Illinois' antiquated tax system also unfairly takes money out of the pockets of some of our best customers: lower- and middle-income families. Illinois' small businesses would benefit greatly from lower tax rates for lower incomes and higher rates for higher incomes.

There's no surer way to grow Illinois' small businesses than through a fair tax that puts more money in the hands of lower- and middle-income taxpayers, empowering them to spend that money supporting ours and other small businesses throughout the state. This is a recipe for both short-term stimulus and long-term growth.

In addition to spurring consumer demand that will allow small business to expand and grow Illinois jobs, the fair tax also presents the opportunity to move Illinois forward into an era of fairer, more responsible government.

The biggest economic cloud hanging over the head of the Illinois economy is the threat of a fiscal crisis based on massive lost revenue from a scheduled income tax cut in 2015. Springfield's fiscal cliff threatens to eviscerate public investments that are critical to our businesses and Illinois' economy. Affordable higher education, quality public K-12 schools and public investment in quality infrastructure are a must for businesses like ours to succeed.

Commitment to a fair tax would send a signal that Illinois is finally serious about long-term, structural reform that produces stable and sustainable revenues and gets our fiscal house in order. That would boost Illinois' standing immediately with ratings agencies and send a strong, positive signal to entrepreneurs.

According to a poll conducted by GBA Strategies last year, DuPage County residents support a fair tax by a margin of 53 percent to 38 percent. However, Tea Party Republicans on the DuPage County Board chose to pass a resolution to generate the misleading impression of overwhelming opposition throughout the County. The board hearing included leadership from Americans for Prosperity and the Illinois Policy Institute, peddling doomsday scenarios about a fair tax in hopes of scaring DuPage residents. While those special interest groups falsely claim to speak for local business owners like us, their real aim is promoting the agenda of out-of-state corporations that bankroll them.

Unlike the scary right-wing conjecture that presumes doom and gloom from a fair tax -- which 34 other states have, even conservative ones -- we have real evidence about how the Illinois' "flat tax" has worked out for us.

It's been an utter failure. Illinois has the worst credit rating of any state in the country and among the worst debt per capita. Our lousy credit rating costs Illinois taxpayers millions of dollars a year in interest. We have some of the highest property and sales taxes in the country. We lag behind the nation in job growth.

Instead of doubling-down on a failed tax and budget policy, a coalition of small-business owners, community organizations and everyday taxpayers known as A Better Illinois have joined to take our state in a new direction. We are working to allow citizens to vote to modernize our Constitution this November in order to allow a fair tax. If we succeed in getting a fair tax, it will be an enormous victory for Illinois' small businesses.

• Steven Purduski is president of SMP consulting of Naperville. SMP consulting provides security software and consulting services to businesses and government agencies. Mike Garrity is owner of Garrity Equipment Co. of Downers Grove, which has been in the food processing equipment business since 1982.

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