Summary:
In this article businesses are revising their plans and budget after a 46 percent corporate tax increase was approve by the Legislature. For many businesses struggling with the economic recession in the States, the tax increase couldn’t come at a worse time. Catty Corps, a flexible packaging manufacturer in Harvard, Illinois had planned to invest money into new printing presses, but due to the increase in corporate tax the owner of Catty Corps Bruce Scott said “Business has gotten so competitive, and profit margins have shrunk,” also he said. “It makes it more difficult to justify the expense of new equipment with these additional burdens.” The company which has 70 employees is starting to settle in its new location, but the higher corporate tax rates won’t help. Critics countered that even with the increase; Illinois tax rate will be lower than the neighboring states Wisconsin and Iowa. Even if it’s lower, many businesses are concerned about the effect of the tax increase. One owner believes that people will rather go to different states than Illinois. Jim Haisler, CEO of the McHenry County Association of Realtors, said the corporate rate would take a toll on real estates businesses as well. Even though many other businesses are making profits many will be concern that near future the younger employee are going to take the huge hit of the income-tax increase. Examples of how businesses will be affect from this is if a business earned around $25,000 in revenue and the new 7% corporate tax is applied ( old one is 4.8%) the business will have to pay $1,750 in taxes. For businesses that is making around 50-100 million dollars of revenue they will probably paid around 2 to 4 million dollars of taxes.
Connections:
In this article it shows examples of corporate income taxes and revenue because many businesses in Illinois are taking a huge hit in their economy due to the 46 percent corporate tax increase was approve by the Legislature. Also I think this is a huge because the economy around the United States is slowly improving than suddenly the state of Illinois approve on a 46 percent corporate tax which will affect the state economy and many people will chose to go to other states than Illinois. Illinois old corporate tax is 4.8 percent and it increase up to 7 percent so to calculate how much corporate tax they will have you multiply the Revenue they earned and the new corporate tax which is 7% you get how much a company or business need to pay. For example if company revenue is 10 million dollars and the corporate tax is 7% you multiply them together to get $ 700,000 dollars they need to pay (10,000,000 x 0.07 = 700,000). Finally, the second example is revenue because revenue of the businesses and companies will be affected due to this tax and also can’t afford to pay for their business or company forcing them to go bankrupt. This can also affect the net income of businesses, and businesses will have to treat it as an expense now. Than businesses and companies will have to rise their and less people will want to buy goods.
Reflection:
In my opinion I think the Legislature approving the 46 percent corporate tax is an outrage for businesses because the economy is just coming back and than BAM! The Legislature approve this corporate tax that will change the economy of Illinois and businesses and companies will have to think fast decisions on where they’re heading because they’re going to paid more on taxes. This can cause higher unemployment rate and many businesses and companies will close down due to this. Basically everyone will be affected of this, from businesses to kids. I think this show the government in need of more revenue for them and businesses and companies getting more expenses which is bad. My only solution is the government shouldn’t approve this plan and try something else like lowering their spending or investing on something to get revenue so there would be any outrage from the people.
