Why do Two-Thirds of Corporations Fail to Pay State Taxes?

We pay our taxes. As a matter of fact, we feel proud when we pay them. When our families and businesses pay their taxes and when members of our churches and unions pay them, we view it as an investment in the schools that educate our children and train our employees, the roads on which we transport our goods, and the programs that serve the people in our communities who are sick, poor, or hungry. We believe, in short, that we have a moral obligation to invest in the common good of our local communities and of our state.

Two-thirds of the corporations operating within our state’s borders, however, pay no corporate income tax at all to the State of Illinois. These corporations aren’t paying taxes at a time when our state is so broke that it is imposing drastic cuts on education, health care and transportation. At a time when we’re cutting the pensions state employees earned over years on the job. They aren’t paying taxes at a time when we’re so broke that the state is delaying payments to social service agencies months at a time and talking about further cuts to the programs people in our communities depend on.

What is even more frustrating is that we don’t know which corporations aren’t paying their taxes and why. Without that information, it’s difficult to know whether they aren’t paying taxes as a result of legitimate deductions — that is to say, deductions that ultimately benefit our state — or simply because they’re tax-dodgers who are shirking their duties by gaming the system.

On Friday morning at the Thompson Center, the Illinois House Revenue and Finance Committee will hold a public hearing on House Bill 3627. The bill, which passed in the Senate last year, would require all publicly listed corporations that operate within our state to disclose their taxes to the public a full two years after filing them.

The bill is an essential first step toward corporate tax fairness. After all, how is it fair to the one-third of corporations that do invest in our state if we let the other two-thirds go scot-free? In particular, how is it fair to small-business owners who often file their own taxes and so fail to benefit from slick accounting tricks? And while we are proud to invest in our local communities and in this state, how is it fair if our families are forced to make an unequal share of the investment?

President Barack Obama said this week that Republicans must avoid making America a “deadbeat” nation. Well, in Illinois, Speaker of the House Michael Madigan has yet to find an adequate solution to our budget problems. Our communities cannot afford any more cuts. The programs they depend on have already been cut to the bone. As such, corporate tax transparency is an essential first step toward crafting a fair corporate tax policy that would put the state of Illinois on firm economic ground.

If Speaker Madigan wants to keep Illinois from becoming a deadbeat state, he should get his House in order. We urge Speaker Madigan to rally House members in support of this bill and ensure its passage by the end of the fall veto session.

This op-ed originally appeared in The Chicago Sun-Times Sept 26th, 2013. It was authored by David Borris, David Hatch, and Marilyn Pagan-Banks, although I also contributed writing to this piece.

David Borris owns Hel’s Kitchen Catering in Northbrook, and serves on the executive committee of Main Street Alliance.

David Hatch is the executive director of the The People’s Lobby, an Illinois affiliate of National People’s Action.

Rev. Marilyn Pagán-Banks is the president of Illinois-Indiana Regional Organizing Network, a National People’s Action affiliate, and executive director of A Just Harvest, which seeks to end hunger through direct service, economic development and community organizing.

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