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TechnographGovernor's gross receipts tax proposal taxes you
By Jacob Vial
Posted: 3/26/07 Section: Opinion Columns
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With spring break behind us, it seems that graduation is only a stone's throw away. I see my friends getting graduation packets in the mail and I'm already receiving those pesky "attention graduate" credit card offers. But if you're graduating this year, don't be overly excited about entering the real world. Our governor is out to make sure that nobody has it too easy in the Illinois job market.
In his standard "press release" style of governing, Rod Blagojevich has announced his plan for generating state revenue. The gross receipts tax plan he proposes would tax businesses with gross receipts over one million dollars. He has touted the program as forcing big corporations to pay their fair share while sticking to his campaign pledge of not raising sales or personal income taxes.
However, the governor is na've to think that gross receipts of one million dollars constitutes big business and is even more na've in thinking that this will hurt large corporations. The only true victims of this tax are job-seeking graduates and all Illinois consumers.
In today's business environment, it has become increasingly easy to gross one million dollars in sales. I attended a press conference hosted by the Champaign Chamber of Commerce in response to the Governor's tax proposal. I listened as local businesses owners of what I think of as small, Champaign-Urbana businesses revealed gross receipts figures. I learned that it is pretty easy for a business on campus to gross over a million dollars in sales. But this doesn't necessarily mean millions of dollars in revenue. In certain industries, such as retail, the contribution margins of stores are miniscule.
It is very easy to sell a million dollars worth of merchandise and have only a small amount remaining to pay employees, rent, utilities and the owner's share. By the Governor's definition though, these business are huge and must pay for their size.
However, the only one paying is you. If you think that businesses are going to sit and take the hit from this tax you're sadly mistaken. Other states that have gross receipts tax even report the revenue earned from the tax on a per capita basis. New Mexico admits on its State Taxation and Revenue website that "in almost every case the person engaged in business passes the tax to the consumer." We can expect to see an increase in consumer prices equivalent to the percentage placed on gross receipts.
In his standard "press release" style of governing, Rod Blagojevich has announced his plan for generating state revenue. The gross receipts tax plan he proposes would tax businesses with gross receipts over one million dollars. He has touted the program as forcing big corporations to pay their fair share while sticking to his campaign pledge of not raising sales or personal income taxes.
However, the governor is na've to think that gross receipts of one million dollars constitutes big business and is even more na've in thinking that this will hurt large corporations. The only true victims of this tax are job-seeking graduates and all Illinois consumers.
In today's business environment, it has become increasingly easy to gross one million dollars in sales. I attended a press conference hosted by the Champaign Chamber of Commerce in response to the Governor's tax proposal. I listened as local businesses owners of what I think of as small, Champaign-Urbana businesses revealed gross receipts figures. I learned that it is pretty easy for a business on campus to gross over a million dollars in sales. But this doesn't necessarily mean millions of dollars in revenue. In certain industries, such as retail, the contribution margins of stores are miniscule.
It is very easy to sell a million dollars worth of merchandise and have only a small amount remaining to pay employees, rent, utilities and the owner's share. By the Governor's definition though, these business are huge and must pay for their size.
However, the only one paying is you. If you think that businesses are going to sit and take the hit from this tax you're sadly mistaken. Other states that have gross receipts tax even report the revenue earned from the tax on a per capita basis. New Mexico admits on its State Taxation and Revenue website that "in almost every case the person engaged in business passes the tax to the consumer." We can expect to see an increase in consumer prices equivalent to the percentage placed on gross receipts.
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