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1 Jonathan Williams, Governor Blagojevich's Gross Receipts Tax Plan Represents Largest State Tax Increase This Decade 1 (2007)

handle is hein.taxfoundation/ffhjxz0001 and id is 1 raw text is: FO UN D AT ON March 19, 2007 Governor Blagojevich's Gross Receipts Tax Plan Represents Largest State Tax Increase This Decade by Jonathan Williams Fiscal Fact No. 79 During his recent State of the State Address, Governor Rod Blagojevich of Illinois proposed the Illinois Tax Fairness plan. While the plan would phase out the corporate income tax over four years, it would also institute a new gross receipts tax on businesses which is forecast as a net tax increase of $6 billion. The new tax would be problematic not only because of the additional tax burden it would impose, but also because of the way in which it would do so. Gross receipts taxes are one of the most economically damaging ways for states to extract revenue, and economists from all ends of the political spectrum are nearly unanimous in their opposition to them.' In addition to the gross receipts tax, Governor Blagojevich proposed a new payroll tax on selected companies,2 bringing the total cost of the plan to $7.1 billion for Illinois taxpayers.3 If enacted, the tax increase would consume an average of $550 per person in Illinois and, as illustrated in Table 1, would represent the largest single-year state tax increase this decade. Table 1. Top Ten State Tax Increases as a Percentage of State GDP, FY 2000-2007 ank State :Tax Increase as a :Fiscal :Percentage of State Year :GDP4 iN/A Illinois* 1.227t 2008 : ........................................ Il 'l Il ?l : ...................................................... .-....................... 1 'Indiana :.446 :2003 :2 'Tennessee .432 iz2003 ............. , ao..................................................... ..:4 0 ...................................................................... iL...0 4...................., 3 daho 4072004 :4 'New Jersey 402 :2007 :5 'Massachusetts :.398 :2003 :6 Connecticut i.354 :2004 :7 Ohio 343 2004 :8 New Jersey ::.314 :2003 .............. I ........................................ ..................................... ......... .....................,

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