Illinois Gov. Pritzker funds proposes new company taxes to shut hole

But business, especially large firms, are being hit with $932 million in proposed higher levies—or “closing corporate loopholes,” as the Democratic governor and aides put it.  And that figure could grow.

On the block are the net operating loss deduction, which would be capped at $100,000 a year, bringing in an estimated $314 million in the fiscal year beginning July; aligning tax treatment of foreign-source dividends, which many large companies earn, with the rate on domestic dividends, estimated to generate $107 million; and rolling back the corporate accelerated depreciation clause, worth $214 million a year.

Officials said all three of those merely would undo changes in tax law pushed through by former Republican President Donald Trump over near-unanimous Democratic opposition in 2017. The proposed changes effectively undo those changes as they affect state taxes.

Also to go are a planned acceleration in exemptions for the use of biodiesel fuel, $107 million; a sales-tax credit manufacturers get for purchasing non-machinery items; and $30 million from the corporate franchise tax, which had been repealed, but which Pritzker wants to reinstate.

In one especially notable move, Pritzker is proposing to cap the fee retailers get for collecting state sales taxes at $1,000 a month, something that would exempt many small stores, but hit large chains. And he wants to “reset” the state’s tax credit for private school scholarships at 40 percent, down from 70 percent now.

The corporate tab could grow more—hundreds of millions of dollars more—if the governor is successful in reviving his bill to decouple from a provision in the last federal COVID relief bill allowing businesses to offset losses now against profits in the past, thereby getting tax refunds.