The fight is on as the ‘privilege tax’ bill gains traction
As lawmakers prepare to return from the spring recess, the proposed “privilege tax" bills are gaining wide-ranging support and putting investment industries in the state on the defensive.
In January, Rep. Emanuel Chris Welch (D-Hillside) introduced House Bill 3393, accompanying similar legislation, Senate Bill 1719, brought by 2018 gubernatorial candidate Sen. Daniel Biss (D-Evanston). Welch's bill would levy a 20 percent “privilege tax” on all private partnerships and S corporations doing business in investment management services in the state of Illinois.
“I am totally opposed to it,” Rep. David McSweeney (R-Barrington Hills) told the Sangamon Sun. “I have been leading the opposition for it.”
McSweeney has been an outspoken in his criticism of HB3393.
“It is a terrible bill,” he said. “We do not need to raise taxes; we need to cut spending in this state. It will drive people and it will drive jobs out of the state. It is going to drive investment managers out of the state and to states like Florida and Texas.”
He was one of the only members of the House Finance & Revenue Committee to vote against the bill, which he said would yield less revenue – not more – because the tax burden would effectively force people out of the state. If passed, HB3393 would target an industry that accounts for a significant portion of all the state's individual income tax revenues.
Along with more than 20 sponsors, Welch has the backing of special interests like the Chicago Teachers Union. One of Welch’s sponsors also includes Rep. Christian Mitchell (D-Chicago) who believes the federal tax code’s capital gains “loophole” should be closed with a solution at the state level. House Deputy Majority Leader Arthur Turner (D-Chicago) also is signed on as a cosponsor, indicating that House leadership has the prerogative to pass HB3393.
Organizations countering the bill include numerous trade organizations, such as the Illinois Venture Capital Association, the Illinois Chamber of Commerce, the Chicagoland Chamber of Commerce, the Taxpayers Federation of Illinois and the Illinois Bankers Association. Many of these groups are leading efforts to sway Democrats to join Republicans to kill the bill.
Democrats who have been or will be aggressively lobbied to vote against on the legislation include Reps. Deb Conroy (D-Villa Park), Jerry Costello (D-Smithton), John D’Amico (D-Chicago), Anthony DeLuca (D-Chicago Heights), Carol Sente (D-Vernon Hills), Elgie Sims (D-Chicago), Michael Zalewski (D-Riverside), Elaine Nekirtz (D-Buffalo Grove), Stephanie Kifowit (D-Aurora), Lou Lang (D-Skokie), Barbara Flynn Currie (D-Chicago), Fred Crespo (D-Streamwood), Natalie Manley (D-Joliet) and Frances Ann Hurley (D-Western Chicago).
Sims and Zalewski are not cosponsors of HB3393 but did support the legislation when it was in committee. Sources said Nekirtz, Drury, Sente and Burke have been contacted by several stakeholders but whether they will support or oppose the legislation remains uncertain.