Some small businesses feel left out of tax cut proposal

Published 01/30 2014 10:10PM

Updated 01/31 2014 09:52AM

SPRINGFIELD -- Under a proposal from the speaker of the Illinois house, corporations across the state could see their income tax rates slashed in half, but some small businesses feel left out of the proposal. The bill, filed Thursday, would cut the corporate tax rate from 7 to 3.5 percent.

But, according to the National Federation of Independent Businesses (NFIB), the proposal would only apply to C corporations, leaving out S corporations. Many small businesses are classified as S corporations.

With an S corporation classification, businesses pay the personal income tax rate of 5 percent. Noonan’s Hardware, in Springfield, is among them. Owner, Matt Noonan III, says a corporate tax cut would give his competitors an advantage, strengthening their bottom lines and, at times, allowing them to offer lower prices.

The tax break proposal is part of a broader conversation on tax reform in Illinois. The personal income tax rate is set to start decreasing in 2015, leaving the state with less revenue. Speaker Michael J. Madigan (D) says the bill would provide corporations $500 to $700 million in savings in its first year, and as much as $1.5 billion in the following year.

“I am hopeful this legislation will encourage CEOs to grow their work forces with good paying jobs,“ Madigan said in a statement.

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