An innocent mistake ought to be recognized as innocent.
It’s easy for elected officials to demonize businesses that don’t, for whatever illegal reason, pay their taxes. It’s a lot harder to come down hard on those businesses when it’s their employees who stand to pay the price if innocent mistakes were made.
Nonetheless, on Monday, Gov. J.B. Pritzker vetoed legislation that would have canceled an estimated $50 million in sales taxes owed by 14 luxury private jet companies doing business in Illinois. That group includes Flightstar in Savoy.
There are several questions surrounding this complicated situation, the biggest being just who’s responsible for what appears to be a costly oversight.
For starters, let’s go to the politics.
Both the House and Senate overwhelmingly passed this bipartisan legislation.
In the House, state Rep. Carol Ammons, D-Urbana, and state Rep. Mike Marron, R-Fithian, both voted for the bill. It passed that body by a margin of 113-0.
In the Senate, state Sen. Scott Bennett, D-Champaign, voted for the bill, as did state Sens. Chapin Rose, R-Mahomet, Jason Barickman, R-Bloomington, and Dale Righter, R-Mattoon. The Senate approved the measure by a vote of 48-1.
With that kind of bipartisan support, it’s worth asking if billionaire Pritzker is just playing to the gallery to avoid being seen as soft on the rich while he confidently expects his veto to be overridden.
Knowing the answer to that would require a mind-reader. But Springfield political analyst Rich Miller, no stranger to the ways and means of insincere politicians, characterized the veto as a political necessity.
“Pritzker really had no choice on this. He’s very wealthy and is known for using a fleet of private jets, so supporting this bill would’ve put him in an awkward political spot,” Miller wrote.
The words “very wealthy” hardly do justice to the size of Pritzker’s wallet. As a scion of family wealth, he’s a multi-billionaire.
Passage of the legislation in the House created a recent flap in the news media, one that prompted an immediate veto threat by Pritzker.
WCIA’s Mark Maxwell reported the details of the low-profile legislation.
His story noted that aviation companies didn’t collect the taxes that were owed from their customers because neither they nor state taxing officials realized that a special sales-tax exemption for private jet facilities expired in 2014.
The companies are seeking a retroactive exemption. They contend that being required to make tax payments they didn’t collect and that the state didn’t recognize were due until recently will devastate their businesses.
According to news reports, a Flightstar lobbyist notified Senate President John Cullerton that the company, which employs nearly 150 people, could lose up to half of its business if the tax exemption is not restored.
Other communities with aviation companies doing businesses near them include Chicago, Peoria, Joliet, Bloomington, Moline, Rockford, Oak Brook, Sauget and Springfield.
That covers much of the state, explaining the broad legislative support for the exemption.
Two things about this issue are inarguable.
The reviled wealthy may fly on private jets. But it’s mechanics, maintenance workers, pilots and the like who actually service and fly them. In other words, they’re ordinary Joes and Janes.
The other thing is that the taxes imposed on these services hurt Illinois because they undermine the competitiveness of these companies and their employees.
Private jets don’t have to come to Illinois to be serviced. There are 30-plus other states that provide similar tax breaks.
It’s impossible to say just who’s responsible for this gross error of omission. But it seems certain that the companies would have collected the taxes if they realized their exemptions had expired. It also seems certain they would have collected the taxes if state revenue officials had issued a timely reminder that they were due.
As for the consequences of having to come up with $50 million in back taxes, they will be different for different companies. But one need not be a financial genius to recognize the financial body blow these companies will endure if the veto is not overridden.
In announcing his decision, Pritzker cited the state’s poor financial standing as the reason for his opposition to providing a sales-tax exemption to the private aircraft companies. No argument there — Illinois is effectively bankrupt.
He also spoke about his plans to create more jobs. But his jobs plan also requires not losing existing ones, something that may — with emphasis on may — happen if Pritzer’s position is upheld.
Given the legislative vote on this issue, an override appears obvious. But just for the record, the reason for the legislation is regrettable, but the need for it is clear, notwithstanding the governor’s posturing.