How Biden’s tax hikes will hurt Illinois businesses
Illinois, like the nation as a whole, is seeing its economy rebound as the pandemic comes to an end. However, massive tax increases proposed by the Biden administration on top of the unnecessary tax increases on employers passed by the Illinois General Assembly and signed by the governor in 2021 threaten to derail the recovery, hurting Illinois job creators and families.
The president’s recent budget proposal includes $3.6 trillion in tax hikes. The administration claims that the tax increases will hit only big corporations and the rich, but the truth is, it is impossible to raise taxes on big corporations without impacting small businesses and families. Higher taxes are passed on, job creation slows, or innovation gets stifled.
Take the proposal to raise the corporate tax rate from 21% to 28%, which the administration wants you to believe will affect only “big business.” The reality is that it would hurt businesses of all sizes, their employees and consumers.
For example, if the corporate tax rate were increased to 28%, Illinois companies would face a combined state and federal rate of 37.5% — more than 9 percentage points higher than China, making it harder for Illinois manufacturers to compete with foreign companies. On top of that, under the president’s budget proposal, companies headquartered in Illinois would face higher U.S. taxes on global income.
According to the U.S. Chamber, this tax hike would hit 91,937 Illinois employers, including more than 63,000 small businesses with fewer returning employees. Many employers that survived the COVID recession are just now returning to business as normal. Sudden and substantial tax hikes are one sure way to stop their recovery dead in its tracks.
Experience shows that the damage from higher corporate tax rates will be borne overwhelmingly by workers, who will see lower wages and fewer jobs. And all Illinois residents, as consumers, can expect to see higher prices and even higher utility bills as companies are forced to pass along the cost of these increased taxes.
President Biden’s proposed tax hikes are not just on established businesses. They also threaten investment in Illinois start-ups and businesses growing through innovation. The Biden plan essentially doubles the tax rate on capital gains, the return investors receive for putting resources behind new and growing companies. Higher taxes will equal less investment in our economy.
While the president sticks to his “big business rhetoric,” one has to ask why he also wants to single out family-owned businesses for higher taxes. When a family tries to keep the business in the family, Biden’s plan would threaten the ability of the next generation of Illinoisans to keep those family-owned grocery stores, restaurants, autobody shops, construction companies and farms up and running.
These tax increases aren’t pro-growth or pro-job policy. They aren’t part of a recipe for recovery. Illinois businesses already face over $600 million in higher taxes courtesy of Gov. J.B. Pritzker’s budget. Biden’s tax plan would only add to their burden.
Hardworking Illinoisians and small businesses deserve better.
Todd Maisch is president and CEO at the Illinois Chamber of Commerce.
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