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Illinois’ stagnant sales tax revenue indicator of flat economic activity

SPRINGFIELD (Illinois News Network) — The state of Illinois is collecting more from individual workers’ and businesses’ income, but the indication from other revenue sources is the state’s economy is flat. A tax professional says state lawmakers haven’t advanced solutions to grow the state’s economy.

Illinois Commission on Government Forecasting and Accountability (COGFA) Revenue Manager Jim Muschinske said individual income tax revenues are up from the year before, as are corporate tax receipts.

From October of last year to this year, personal income tax grew from $1.05 billion to $1.46 billion. Corporate income tax jumped from $4 million in October 2016 to $80 million in October 2017.

Muschinske said the large jump in the corporate income tax receipts “is largely indicative of the Department of Revenue’s ledger conversion change they undertook last year. That conversion has significantly impacted historic receipt patterns and corporate income tax was operating well below expectations. As a result of that, there was reconciliation that took place.”

But the real driver of the increased revenue from individuals and corporations is mainly from state lawmakers increasing income taxes over the governor’s veto.

Muschinske said those aren’t the numbers to look at for an indication of economic health.

Other sources from taxes on sales, public utilities, cigarettes, liquor, vehicle use and insurance are either flat or down from the year before.

“I would say the sales tax being up less than 1 percent kind of signifies we’re in a low growth period, which we have been in the last few years,” Muschinske said.

Tax expert Michael Leonard said Illinois lawmakers know the state’s economy is stagnant but real solutions aren’t advancing.

“That’s going to scare investors,” Leonard said. “That’s going to scare a lot of people that want to open up a business. They’re going to say, ‘You know what, if I’m going to start a business, do I really want to start it here in Illinois?’”

Leonard said if he ran his business, Leonard and Associates, the way government is run, “I’d be out of business within a year. But the thing is, they keep getting money to keep them going forward, so they keep failing and asking for more.”

Calls for economic reforms haven’t gone anywhere in the Democratic-controlled legislature.

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Illinois’ stagnant sales tax revenue indicator of flat economic activity