What Illinois needs most from federal tax reform
Federal tax reform is
a once-in-a generation opportunity to strengthen the global competitiveness of Illinois businesses. Now Illinois policymakers have the chance to successfully advocate for the state by pursuing and defending pro-growth policies that are best for our job creators and economy.
While the congressional tax plan is extensive, the Illinois Chamber of Commerce encourages policymakers to focus on two overarching issues that are needed most.
Cutting the corporate income tax rate and reducing the number of individual tax rates.
mall businesses are major job creators in Illinois and must not be overlooked. While we support cutting the corporate tax rate to 20 percent, we must remind policymakers to look out for our small businesses.
Lower corporate tax rates would provide an incentive for companies to retain and locate new operations in the U.S., and Illinois in particular.
The reduction will bring U.S. rates more in line with the corporate tax rates in other countries and make the U.S. business climate more globally competitive. We must ensure that our small businesses that create most jobs in Illinois are positioned for growth.
A rate reduction to 25 percent of the income of pass-through entities passed down to partners and shareholders would encourage formation and growth of small and mid-size businesses. Additionally, while reducing the corporate tax rate, Congress should lower the income taxes imposed on individuals. Keeping more income in the hands of individuals is better for the economy.
Protecting those deductions and tax credits that are good for Illinois businesses.
While we recognize the need to reduce some existing deductions and credits, we encourage Congress to protect the following deduction and credits that if eliminated would harm Illinois businesses:
- The Domestic Production Activities Deduction: While many policymakers understand that the deduction helps manufacturing, not many people know it is very important to telecommunications, software developers and the agriculture community- the No. 1 industry in Illinois in terms of economic impact.
- The orphan drug tax credit: Illinois has a strong pharmaceutical industry, and this tax credit is critical to research and development activities that would not be economically viable without the credit.
- Full interest deductibility: Interest deductibility is of critical importance to businesses of all sizes that are required to access the credit markets to finance expansion and day-to-day operations.
Recently, the Illinois Chamber of Commerce met with Gary Cohn, director of the National Economic Council, at the White House; U.S. House Speaker Paul Ryan's senior staff at the U.S. Capitol; and staff at the U.S. Department of the Treasury-with the support of Ways & Means Tax Policy Chairman Peter Roskam, R-Wheaton-to discuss tax reform.
The Illinois Chamber will continue to work with officials on this issue.
Implementing the reform is the much-needed next step. Congress has a tremendous opportunity to enhance Illinois' global competitiveness. We encourage policymakers to seize this opportunity to enhance Illinois' global competitiveness by passing and protecting pro-growth policies in the tax reform package.