A fair tax for Illinois’ small businesses and the middle class

<p>The <a id=Illinois State Capitol in Springfield, Ill.  |  AP Photo/Seth Perlman

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The Illinois State Capitol in Springfield, Ill.  |  AP Photo/Seth Perlman

It seems readily apparent as a small business owner and Naperville native that Illinois needs a Fair Tax, with lower tax rates for lower incomes and higher rates for higher incomes.

I co-own Wheatland Animal Hospital, located in Naperville, which employs more than two dozen residents of DuPage and Will counties.

As middle class families in our area struggle, so too do local small businesses. Our profession has seen a decline in patient visits over the last few years, dating to 2007, and a direct correlation has been made with the economic downturn. Many clients are still struggling, and those who are coming in for visits are having a difficult time determining which services to elect.

Recently, state Sen. Don Harmon introduced a Fair Tax rate structure that would provide a tax cut for 94 percent of Illinois taxpayers, including everyone who makes up to $205,000. A Fair Tax would put money back in our clients’ pockets, who would likely spend that money supporting small businesses in the area. This, in turn, allows businesses like the Wheatland Animal Hospital to thrive and continue employing local residents at reasonable wages.

And contrary to the false claims of Fair Tax opponents, the current proposal would also provide tax relief for the overwhelming majority of Illinois small businesses themselves. Most small businesses exist as pass-through entities, meaning they pay the individual income tax rate. What opponents fail to point out, however, is that the adjusted gross income of 92.5 percent of small business filers is $200,000 or less, meaning the proposal is a massive small business tax cut, not an increase.

Small businesses like Wheatland Animal Hospital are the backbone of Illinois’ economy. They account for nearly half of all jobs throughout Illinois. Small businesses put money in the hands of the middle class, employing 2.4 million workers in Illinois, who use that money to stimulate our local economy.

Many Springfield politicians have yet to understand the economic imperative of promoting small businesses. Instead, they have relied on a broken budget process characterized by continued cuts to public education and infrastructure and wasteful tax giveaways to big corporations.

These policies dampen Illinois’ business climate and put small business owners at a disadvantage against competitors, both in surrounding states with a Fair Tax and here in Illinois where big corporations avoid paying their fair share. Illinois’ outdated and unfair tax system also takes money out of the pockets of some of our best customers, middle and lower income families.

A key priority for Illinois small businesses is access to a skilled workforce. At Wheatland Animal Hospital, we employ people with a range of educational backgrounds, which is why it is crucial for businesses like ours that Springfield support education from pre-kindergarten through the post-graduate level. Illinois currently ranks dead-last in state support of K-12 education and higher education investment has dropped 40 percent in the past dozen years when taking into account inflation and population increases.

Presently, it’s more expensive for an Illinois resident to attend veterinary school in Illinois than to cross the border and attend school in neighboring states. We are at risk of losing our best students to neighboring states’ superior public schools.

Springfield’s abandonment of public education, and the subsequent increases in college tuition, has put a strain on young people I employ who are working their way through college as well as those who have earned a degree and are saddled with student loan debt. Illinois is losing talented students who would otherwise grow our economy to Fair Tax states that support education.

Things are about to get much worse, unless Springfield makes fundamental changes, and fast. Without fundamental reform, Springfield partisans will take Illinois over an enormous fiscal cliff.

Expiring tax rates scheduled for later this year will blow a $2 billion hole in the state budget, resulting in devastating cuts to vital investments that are critical to the success of Illinois’ businesses. Illinois’ university presidents warn they are bracing for 30 percent cuts to their schools’ budgets that will force tuition hikes on students who cannot afford it.

Commitment to a Fair Tax also would send a signal that Illinois is committed to long-term, structural reform that produces stable and sustainable revenues and finally gets our fiscal house in order. That would boost Illinois’ standing immediately with ratings agencies and also signal to businesses that we’re finally committed to the investments in education, transportation, and critical infrastructure to make our state competitive and attractive to locate their activities.

If we succeed in getting a Fair Tax, it will be an enormous victory for Illinois’ small businesses.

Dr. Christopher Dupuis is a co-owner of Wheatland Animal Hospital in Naperville.