The Plan
Helping Businesses by Cutting Taxes. Provides a 20% tax cut for businesses that pay Illinois corporate income tax and that create or maintain jobs in the state.
To qualify, the company must:
- Pay Illinois corporate income tax for 2007
- Maintain Illinois employment levels
Funding and Benefits
To support the Protecting Illinois Families plan, the State will use a one-time revenue source. One option is to securitize revenues into up-front payments. Eighteen states, including California, New Jersey, Ohio, West Virginia, and Virginia have completed securitizations.
One example of a securitization is tobacco settlement funds. In 1998, Illinois along with 45 other states signed a settlement with four major tobacco companies who agreed to pay hundreds of billions of dollars in damages for the ill effects of smoking. The amount Illinois receives is based, in part, on national tobacco consumption. Decreased consumption and other factors are expected to lower future revenues. Doing an up-front securitization transfers this risk for declining revenues to another party.
The tax cut will be funded through one time revenues, such as securitizations. The corporate income tax cut will allow businesses to invest $300 million additional dollars into their businesses in 2008.
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