Trade association keeps an eye on the Illinois Legislature: Strives to educate voters to the behavior of politicians.
The Illinois Association of REALTORS®—one of the largest trade associations in the state with 46,000 members. Founded in 1916, is the leading private property advocate in Illinois, recommending and promoting legislation that safeguards and advances the interests of real property ownership while also being the recognized voice for real estate in Illinois. IAR is an advocate for a healthy business environment and a resource for its members to deliver ethical and professional services to the public and to one another.
As reported by the IAR, On the last day of the 96th General Assembly a major tax and spending initiative was narrowly approved in both the House and the Senate and the Governor Quinn quickly signed the bill into law (P.A. 96-1496). Senate Bill 2505 increases both the personal and corporate income tax (effective immediately), suspends the net operating loss deduction for corporations for 4 years, reinstates the estate tax in Illinois, and imposes a limitation on State spending beginning July 1, 2011 (fiscal year 2012) through fiscal year 2015.
The income tax rates had been 3% for the personal income tax and 4.8% for the corporate income tax. Under the provisions of the new law the bill rates will be:
- January 1, 2011-December 31, 2014 5% personal/7% corporate
- January 1, 2015-December 31, 2024 3.75% personal/5.25% corporate
- On and after January 1, 2025 3.25% personal/4.8% corporate
The IAR testified against the proposal and brought out all of these flaws in testimony in both the House Revenue and Finance Committee on Tuesday morning and in the Senate Executive Committee Tuesday afternoon (Jan. 11). In the end the House redrafted the legislation (House Amendment #3) removing the rebate provision and restoring the current tax credit. The House approved the amended legislation on a roll call vote of 60-57-0 (60 votes needed for passage) and the Senate followed suit in the wee hours of Wednesday morning on a roll call vote of 30-29-0 (30 votes needed). The Governor took similarly swift action; signing the bill into law on Thursday.
NO REPUBLICAN members of either chamber voted for SB 2505. Ten Democrats voted NO in the House and 7 Senate Democrats voted NO. The roll call votes are available on the General Assembly Web site.
One item that was removed from the legislation prior to its passage was related to property taxes.
Illinois has had a 5% income tax credit for property taxes paid by homeowners. The bill, touting “property tax relief”, initially would have completely eliminated this 5% income tax credit and replaced it with a flat rebate to homeowners. Proceeds of a quarter point of the income tax increase would have been placed into a fund that would be divided equally among all homeowners who paid property taxes and filed for the rebate with their tax return by April 15th (failure to file by this date would have made property taxpayers ineligible).
The idea was for the state to send checks out by mid-summer saying, “Here’s your property tax relief check brought to you by the General Assembly and Governor”. Obviously, a convoluted proposal with several intended and unintended consequences. First, everyone would get the same rebate amount, regardless of their relative tax burden. The intent was to make this income tax provision for property taxes progressive (i.e., giving people with less expensive homes more of the benefit than those with more expensive homes) but it penalized highly taxed homeowners. In other words, two homeowners with a house of the same value who pay vastly different tax amounts would get the same flat tax rebate, whereas the current credit gives you relief based on the actual taxes paid. The initial proposal also contained a provision to eliminate the rebate if the General Assembly failed to meet the spending caps specified in the bill, leaving taxpayers with NO relief.
House Bill 3659, which was approved in both chambers is intended to go after a portion of the uncollected sales tax revenue lost from online commerce in the state. Amazon.com and Overstock.com were highlighted since these companies allow third-party vendors to sell through its Web site.
According to the Illinois Retail Merchants Association (IRMA), HB 3659 creates criteria by which online sellers are considered to have residence in the State of Illinois and, therefore, must collect and remit the appropriate sales tax (6.25%) on every sale they make to Illinois residents. While the state gets sales taxes from businesses that have a physical presence in the state, groups such as IRMA and the Illinois Manufacturers Association successfully argued that Illinois businesses and employers were at a disadvantage and that this was a matter of fairness.
The Illinois Department of Revenue estimates that the legislation will bring in $70 million in sales tax revenue. Critics have cited that similar efforts in other states have only led to court challenges, and the targeted companies cancelling their third party commission agreements in the state. The bill was approved by the Senate on January 5, 2011 (49-6-3) and by the House on January 6, 2011 (88-29-0). While it is expected that the Governor will sign the bill, as of today it was still under his consideration.
House Bill 1617, approved by the General Assembly in December is still pending action by the Governor. HB 1617 creates another port district authority in Illinois– the Ottawa Port District Authority. This measure, sponsored by Representative Frank Mautino (D) and former Senator Gary Dahl (R), is an economic development tool for the city.
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