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Thursday, Dec. 8, 2011 03:20 am

Why the business tax cut failed

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Illinois House Republican Leader Tom Cross.
PHOTO BY JOSE M. OSORIO/MCT
It’s a fairly common Statehouse phenomenon that bills will zoom out of the Senate or the House and then flame out in the other chamber. People in the other chamber just don’t always care as much as the people who first sponsor the bills. Often, they also don’t want to be pushed around by the other chamber.

That explains part of what happened last week, when the Senate passed a major tax cut package with a supermajority of 36 votes and then the bill received only 8 votes in the House, despite the fact that the Senate bill would cost just a few million dollars more than the House’s plan.

There’s far more to this failure than the usual House vs. Senate dynamic, of course. House Speaker Michael Madigan has declared neutrality on the bill, apparently because of a conflict of interest. Without the “Velvet Hammer” pushing hard for what is obviously a hugely controversial measure, the House just couldn’t get it done.

House Majority Leader Barbara Flynn Currie has made it clear that she’s skeptical of the repeated threats to leave the state by CME Group and Sears. Part of that tax cut bill would lower both companies’ taxes. Rank and file Democrats could have taken her public comments as a sign that Speaker Madigan was also not thrilled with this tax cut idea.

The House Republicans have been irritated with the Senate Republicans all year, and vice versa. That irritation came to a head at the end of the spring session, when many Senate Republicans supported the workers’ compensation reform bill while the House Republicans opposed it, and the House Republicans backed the budget while the Senate Republicans all voted against it. The House GOPs say their Senate counterparts undercut them again on last week’s budget deal, and they were furious that nine Senate Republicans voted for the tax cut bill after House Republican Leader Tom Cross made it clear that he and his caucus were opposed.

Leader Cross’ opposition was certainly a major factor in the bill’s overwhelming failure. The Democrats say they had 38 of the 60 votes needed to pass it, but almost all of them bolted as soon as they realized that the House Republicans wouldn’t be supporting the bill. There’s no sense in being on record supporting a controversial bill when nobody else is, either.

Cross said his caucus had problems with the Senate’s increase of the state’s Earned Income Tax Credit, which was higher than the House version, as well as the Senate’s indexing of the standard income tax exemption to inflation. Cross also said he didn’t fully believe CME Group’s contention that its new tax levels ought to be as low as the company claims.

Democrats in both chambers believe that Cross has some ulterior motives for opposing the tax bill, and they pointed to everything from big CME Group campaign contributions to Democrats, to big Cross contributors, to campaign politics related to Sears’ portion of the bill, to a general national Republican plan to create as much chaos as possible then blame the Democrats for it.

Nobody offered any proof of any of their allegations, of course, but there’s no doubt that Cross holds the cards here, and he doesn’t appear to be cooperating. Cross said he’d put 30 votes on a revamped proposal which eliminated all tax relief for the working poor, but the Democrats say they’d only get 10-15 votes for such a plan, which would leave them far short of a 60-vote majority.

So, where does the General Assembly go from here?  Democrats in both chambers believe they need to somehow put public pressure on Leader Cross. That’s easier said than done. Democrats control the government, after all, and blaming the minority party is never a simple thing to do. The Democrats tried to blame the Republicans for the failure of the proposal to borrow money to pay off the state’s past due bills, but it didn’t work. They’re still getting the blame for those past due bills and the Democrats will almost undoubtedly wear the jacket if CME and Sears bolt the state for greener pastures, even if it isn’t their fault. 

Some top Democrats believe that Chicago Mayor Rahm Emanuel must get more involved. Since Speaker Madigan’s neutrality means nobody with any real clout is pushing this bill in the House, Emanuel will have to take Madigan’s customary place.

Rich Miller publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.
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