SR0505 104TH GENERAL ASSEMBLY

SR0505 LRB104 16089 MST 29378 r

SENATE RESOLUTION

WHEREAS, Recent federal tax law changes enacted by Congress in H.R. 1 represent one of the most comprehensive reforms to the Internal Revenue Code in over three decades, building on the success of the Tax Cuts and Jobs Act of 2017 by further simplifying tax administration, reducing rates for individuals and businesses, and targeting relief to working-class Americans as well as the job creators in our country; and

WHEREAS, Several of the new federal tax law changes will provide much-needed relief to the economic engines of our country and our State by making permanent or expanding several pro-business tax policies, such as the enhanced small business deduction for equipment and software, restoring a business's ability to immediately expense research and development costs, and establishing a new deduction for manufacturers that build new facilities in the United States; and

WHEREAS, By enacting these tax law changes, Congress has positioned Illinois' economy to directly benefit from the new investments businesses will make throughout the State by building new facilities, hiring additional employees, and engaging in new research and development projects, all of which will create high-paying jobs that allow Illinoisans to support their families; and

WHEREAS, Illinois has long benefited from maintaining conformity with the federal tax code, as conformity streamlines tax administration, minimizes compliance costs for Illinois taxpayers, and provides consistency and clarity for both the State's economy and all Illinoisans; and

WHEREAS, Decoupling Illinois' income tax system from the federal tax code would impose unnecessary complexity on Illinois taxpayers by requiring them to maintain separate accounting for State and federal purposes, while simultaneously raising taxes on the very businesses Illinois needs to help the State's economy thrive; and

WHEREAS, Maintaining conformity with the federal tax code promotes economic competitiveness by providing a stable and consistent framework for investment and job creation, while decoupling risks undermining Illinois' attractiveness to employers and entrepreneurs; and

WHEREAS, Illinois taxpayers already face high tax burdens relative to other states, as research from the Taxpayers' Federation of Illinois found that in FY 2022, Illinois had the ninth-highest total tax collections when measured as a percentage of gross state product; and

WHEREAS, Illinois currently has the third-highest corporate income tax rate in the country, according to the Tax Foundation, and decoupling would lead to tax increases and compliance burdens that would further disadvantage Illinois residents and businesses; and

WHEREAS, New tax increases or other changes in State tax law could alter asset deployment strategies by businesses, shift business expansion plans to neighboring states, cause out-of-state businesses seeking to relocate to bypass Illinois, and encourage Illinois businesses to move to more favorable tax jurisdictions; and

WHEREAS, Illinois' economic growth has been stubbornly slow compared to neighboring states, while the State's unemployment rate has remained higher and income growth has lagged; and

WHEREAS, Many states have chosen to retain conformity with H.R. 1 to maintain simplicity, transparency, and efficiency in their tax systems; and

WHEREAS, It is important to focus on policies that promote fiscal responsibility and economic growth rather than raising taxes on job creators and introducing additional complexity and uncertainty into its tax code; therefore, be it

RESOLVED, BY THE SENATE OF THE ONE HUNDRED FOURTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we respectfully urge the Governor of the State of Illinois not to decouple Illinois' tax policy from the federal tax changes contained in H.R. 1; and be it further

RESOLVED, That we respectfully urge the Governor to pursue his publicly stated preferred method of balancing the State's budget by pursuing pro-growth policies by continuing to align Illinois' tax code with Internal Revenue Code to prevent an unnecessary tax increase on the job creators of our State and to ensure simplicity, fairness, and competitiveness for all Illinois taxpayers; and be it further

RESOLVED, That suitable copies of this resolution be delivered to the Governor of the State of Illinois, the Director of the Illinois Department of Revenue, the President of the Illinois Senate, and the Speaker of the Illinois House of Representatives.