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home : insight & opinion : guest columns
December 14, 2017

3/15/2007 4:14:00 PM
Guest column
'Current Occupant' out of touch on taxes
By ERIC GUBELMAN
For the Daily News

"Brother, can you spare a dime?"

That may be the refrain of Illinois small business after another four years of Democrat Rod Blagojevich.

A disclaimer: To the amusement of my father, I have been a Democrat since the age of 18, and was on the ballot in Freeport in 1992 for the Illinois State Senate as a pro-business Democrat - a description that may become an oxymoron if the Current Occupant of the governor's mansion gets his way.

In the Occupant's first term, he passed an array of business fees to generate more than $320 million in new money, primarily by jacking up fees on trucking and on small towns for wastewater treatment.

In the Occupant's second term, we are dealing with the impending increase on the minimum wage, which raises labor costs 15 percent. Fine and good. Popcorn combos and adult admission prices are up a quarter, the hours available to our teens are reduced a bit, and we do the best we can. Cost to Eagle Theater without changes - more than $7,000 per year.

This month we are dealing with the Occupant's inaction on utility costs, which raised the theater's average cost per kilowatt hour at the theater from 6.7 cents to 9.7 cents, an increase that will cost us nearly $9,000 additional in 2007.

(This has spurred us to get more efficient, and we are making investments to relamp the entire theater with compact fluorescent bulbs and install exhaust systems for our film projectors, to send hot air out of the building during the summer.)

The Current Occupant says businesses don't pay their fair share of tax. I'm not sure that any share would be enough to satisfy his definition of "fair share." Instead of proposing reform of the corporate income tax (are there some loopholes?) or raising the rate for corporate income tax, the governor is seeking to tax revenue rather than profit. Perhaps the governor missed the difference in accounting classes, but for those of us in business, there is a huge difference.

The Occupant's $6 billion gross-receipts tax proposal will tax business regardless of whether they are profitable. These are stealth taxes, and among the businesses most hurt will be marginal and startup businesses in the state.

As proposed, Eagle Theater may be exempt because we currently gross less than $1 million per year. But Eagle Theater Corp., which owns the theater, could very well face the tax if we add but a single theater in the state, pushing us over the $1 million in revenues. If we expanded our business on land adjacent to the theater, we would likely be subject to the tax, regardless of profitability. Given the impending tax climate, why would we expand?

When the Current Occupant says small business is exempt, he reminds us of Bill Clinton parsing the meaning of "is." It depends on what you call a "small" business, governor... More than three years ago, 20 community-minded people banded together to build a movie theater that almost is a big business under the Occupant's definition, but which is not expected to generate any financial return to its investors for years to come.

Even though the theater may not pay taxes directly, we will pay them indirectly, as the cost of Pepsi and popcorn rise because those companies will pay the tax.

A gross-receipts tax violates fundamental principles of tax policy and would directly and negatively impact Illinois' economy by frustrating job growth and economic development in addition to increasing the cost of goods sold to Illinois consumers. Entrepreneurs create jobs, but the incentive to create them in Illinois is about to disappear.

I didn't agree with everything that Jim Edgar did as governor, but he understood that Illinois had to pay its bills, live within its means, and strike a balance between taxation and the pursuit of public policy goals.

I'm beginning to think we need another downstater in the governor's office - someone who is neither too conservative or too liberal. Maybe I can be a charter member of "Democrats for Roger Eddy..."



(Gubelman is President of Eagle Theater Corp.)





Reader Comments

Posted: Friday, March 16, 2007
Article comment by: Don Gubelman

My comment is that Eric addressed the questions in a manner that should have been addressed prior to even bringing them up.


Illinois cannot survive financially funding programs that constantly need more money every year.





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