Tongues wag over Madigan tax plan

House Speaker Michael Madigan's apparent flip on corporate income taxes demonstrates his ability to surprise.

As is his wont, Illinois House Speaker Michael Madigan threw a curveball last week to the people of Illinois and members of the state's business and political communities.

Just a few weeks after berating the state's corporate community for not paying its "fair share" in taxes, Madigan proposed a dramatic reduction in the corporate income tax that would cut state revenues by $1.5 billion between July 1, 2014, and June 30, 2015. Specifically, Madigan called for cutting the 7 percent corporate tax rate to 3.5 percent, even though in January 2011 he presided over an increase in the corporate tax rate from 4.8 percent to 7 percent.

In a statement, Madigan said it is his hope that reducing the corporate income tax would improve the state's business climate and boost economic development.

"I am hopeful this legislation will encourage CEOs to grow their workforces with good paying jobs," he said.

When Madigan speaks, people listen, and the reaction to his pronouncement was swift and strong. Republicans who've been harping about Illinois' business-unfriendly reputation for months were generally pleased, while a surprised Democratic Gov. Pat Quinn said he didn't know anything about it.

"I haven't talked to the speaker about anything on that subject," Quinn said.

The governor pointedly declined to embrace it, saying that "people are free to bring up anything they want."

Madigan's announcement also jump-started one of Springfield's favorite parlor games — trying to divine the speaker's real intentions. To say that he's a riddle wrapped in a mystery inside an enigma is to understate Madigan's motivations and machinations.

He might really believe that Illinois should reduce its corporate income tax. He also might believe the opposite. He might not have an opinion at all. People will know what he really wants when and if legislation is passed and signed into law or, conversely, if nothing at all happens.

But Madigan clearly believes some type of discussion of taxes is necessary, whether it's to provide political cover to his fellow Democrats running for re-election, lay the groundwork for a larger tax plan or both.

Taxes clearly are on the General Assembly agenda in 2014. That's because portions of the dramatic personal and corporate tax increases passed in 2011 are scheduled to expire at the end of the year.

The personal income tax is scheduled to fall from 5 percent to 3.75 percent, and the corporate income tax is schedule to drop from 7 percent to 5.75 percent.

Gov. Quinn has refused to discuss whether he supports the rollback or wants the current rates extended or made permanent. But because he's desperate for the revenue the current rates produce, it seems obvious that he'll oppose any rollbacks. Further, he's stated many times that he wishes Illinois would adopt a progressive personal income tax, a move that will require amending the Illinois Constitution.

Whatever the politicians' preferences, analysts have suggested lawmakers will wait to act until after the November election to escape any pre-election vote consequences.

It would be nice, of course, to be able to take Madigan at his word and evaluate his proposal on the merits. It's inarguable that Illinois must enhance its reputation as a place for job creators to build and expand, that without movement in that direction Illinois will continue to trail its neighbors in economic growth and fiscal health. Madigan's proposal is a step in the right direction.

But there's more to passing a bill than issuing a press release. If Madigan is serious, he'll start the legislative ball rolling in the direction he wants it to go.

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yates wrote on February 03, 2014 at 3:02 pm

Corporate Welfare! Corporate Welfare! Corporate Welfare! I said it for you Sid.

Sid Saltfork wrote on February 04, 2014 at 12:02 pm

The state is behind in paying it's debts.  The legislators keep spending.  Madigan talks about cutting corporate taxes.  Yates; where is the money going to come from to pay the debts, and provide services? 

Whether it is Madigan, Rauner, Brady, Rutherford, Dillard, or Quinn telling you that; you know it will not work.  The money has to come from somewhere.