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1 Chris Atkins, The Hidden Tax for Sm(all) Business in Governor Blagojevich's Gross Receipts Tax 1 (2007)

handle is hein.taxfoundation/ffibxz0001 and id is 1 raw text is: FOUNDATION March 29, 2007 The Hidden Tax for Sm(all) Business in Governor Blagojevich's Gross Receipts Tax by Chris Atkins Fiscal Fact No. 81 I. Introduction Illinois Governor Rod Blagojevich is asking small businesses in Illinois to believe that his gross receipts tax (GRT) proposal will not impact their operations or their bottom line. Indeed, the Governor claims that small businesses will be exempt from the tax because the first $1 million in gross receipts will not be taxable.1 What the Governor is not telling Illinois businesses, however, is that the GRT will impose a stealth tax increase on all businesses--big and small--through an increase in the price of the goods and services they buy. In turn, these businesses will likely recoup the cost of this hidden tax by: * Raising the price of the goods and services they sell; * Purchasing their inputs from out-of-state sellers, or; * Integrating with other businesses to avoid the GRT altogether If businesses are unable to shift the hidden tax by these methods, they will have to do one or all of the following: * Lower wage payments to workers; * Save less money; * Make fewer new investments, or; * Lower the rate of return on their existing investments Each of these possible responses by business owners would have negative economic consequences for every Illinois citizen who would end up bearing the true economic burden of this hidden tax. It is perhaps no irony that the largest tax increase this decade2 would largely be hidden from unsuspecting Illinois citizens and business owners. This Fiscal Fact will show that, unless the people of Illinois (small business owners in particular) examine this tax proposal

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