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Governor's tax plan smacks of political payback

Tuesday, September 25, 2007
Crain's Chicago Business
Editorial

Call us paranoid, but we can't help thinking Gov. Rod Blagojevich's move to extend and expand the cap on residential property tax hikes in Cook County contains an element of revenge against a business community that helped defeat the massive new tax he tried to impose on business revenues.

As Greg Hinz reported last week on ChicagoBusiness.com, Mr. Blagojevich's property tax gambit would give local governments little choice but to make businesses pay the hundreds of millions in property taxes homeowners would save under the expanded cap.

The proposal is consistent with the anti-business approach Mr. Blagojevich has pursued since taking office 4Ĺ years ago. He propelled his doomed gross-receipts tax with the canard that "corporate fat cats" don't pay their fair share of state taxes.

No matter how you slice it, that's dead wrong. As Mr. Hinz reports this week, corporate income taxes reached a 20-year high last year as a percentage of total state income taxes. And that doesn't even take into account the heavy property tax burden on Illinois businesses.

The burden is particularly heavy in Cook County, where business property is taxed at a higher rate than residential property. Adding to that inequity is the residential tax cap, which forces businesses to shoulder a heavier share of the property tax load than they would have without the cap.

Along with business, the cap expansion gores Mr. Blagojevich's other bogeyman ó Illinois House Speaker Michael Madigan. Mr. Madigan makes a nice living as a lawyer representing businesses that would pay the freight for an expanded residential cap.

Whether Mr. Blagojevich's expanded tax cap takes effect or not depends on whether the Legislature overrides the amendatory veto he used to effectuate it. That makes it hard to say whether his action will have any practical impact on property taxes in Cook County.

What's clear is that it will do nothing to solve the real problem: Illinois' over-reliance on property taxes to fund education and local government. But Mr. Blagojevich is more interested in sticking it to his enemies than solving the state's problems.



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