In a bid to balance Illinois’ budget, Gov. J.B. Pritzker has proposed scrapping nine items in the corporate tax code. The 9 items — which are either corporate loopholes or vital incentives, depending on who you ask — would save the state almost $1 billion annually.
Among the items slated for the garbage bin are a Trump-era deduction on foreign dividends; a write-off for quickly-depreciating assets; and a re-instatement of the state’s corporate franchise tax.
Budget officials said most of the changes would not affect 99% of businesses in the state, although one item in particular — a tax deduction for operating losses of over $100,000 — would affect about 20% of businesses, according to the Illinois budget director.
A rundown of the credits on the chopping block, from the Daily Herald:
According to Deputy Gov. Dan Hynes and state budget director Alexis Sturm, the state would see $314 million more annually by capping corporate net operating loss tax deductions at $100,000. About 20% of Illinois businesses would be affected by this change, Sturm said. The change would sunset after three years.
Next, the state could generate $107 million annually by rolling back a Trump-era perk on deductions of foreign-sourced dividends. Multinational corporations currently receive more favorable treatment in deductions of their overseas subsidiaries’ shareholder profits than dividends generated domestically, budget officials said.
Another Trump-era policy Pritzker wants eliminated allows companies to claim 100% depreciation deductions on corporate assets in the year they are purchased. Sturm said the budget plan calls for legislation that would change the allowable deduction back to the standard depreciation schedule and generate $214 million annually.
The state could also receive $107 million more annually by accelerating the expiration of a biodiesel tax exemption, according to budget documents from the state.
The budget plan also calls on the legislature to reverse the repeal of the corporate franchise tax and reset tax credits for private school scholarships. And the proposal would eliminate a tax exemption on office furniture and other assets claimed by manufacturers that was intended solely for manufacturing machinery. Those changes combined would net the state an estimated $100 million.