Holding Wall Street accountable in Illinois
Coalition wants to close Illinois tax loopholes for businesses
If corporations paid their fair share of taxes in Illinois, the state’s budget crisis would disappear, according to an advocacy group calling for higher taxes on big businesses.
Make Wall Street Pay Illinois says large banks and corporations in Illinois “continue to hoard their wealth” while slipping through tax loopholes and sending jobs to other countries, among other practices the group says hurt communities.
“The big banks broke our economy and caused our budget crisis,” the group claims. “They are the reason we have to choose between funding education and public services. It is time for the banks to start pulling their weight.”
MWSP points to a 49 percent surge in profit for Illinois-based companies during 2010, adding that the top five publicly traded corporations in the state made $19.7 billion in profit last year. That profit should translate to more revenue for the state, MWSP says, but that’s not likely.
The group points to a depreciation tax break for corporations that cost the state $600 million last year, saying Illinois needs to decouple from similar federal tax breaks that cost the state money.
“Large corporations in Illinois are raking in massive profits while the state struggles to make ends meet,” MWSP says, explaining that a temporary federal tax break for businesses in 2012 means companies can depreciate capital expenditures all at once instead of parceling them out over time. That will cost Illinois an estimated $600 million because the state’s corporate income tax is based on how much federal tax a corporation pays.
MWSP also claims that two large national banks operating in Illinois have greatly reduced their loans to small businesses, hampering business development. From 2007 to 2010, Bank of America reduced small business loans in Illinois by 97 percent, while JP Morgan Chase reduced the same loans by 70 percent, according to data from the U.S. Small Business Administration, which tracks the loans. MWSP says that decline has had “a dramatic effect on unemployment in Illinois,” citing the loss of 371,000 jobs in Illinois since 2008.
MWSP calls for an end to “interest rate swaps” – the practice of banks holding state and municipal governments to interest rates set before those banks received federal bailout money. MWSP says the banks themselves pay back the bailout money at interest rates sometimes lower than half a percent, while charging higher interest to the state at around $88 million per year. That figure doesn’t include the cost to municipal governments.
Attorneys general in California, Connecticut and Florida are investigating whether the practice constitutes fraud, and MWSP is calling for Illinois Attorney General Lisa Madigan to hold public hearings on the issue.
“Your power to look into fraud and wrongdoing in the State of Illinois is critical to our communities, and critical to our economic recovery,” the group said in a letter to Madigan. “During this revenue crisis, we can’t let big banks and Wall Street continue to gouge our communities.”
The recently-formed group, which includes Bloomington-based Illinois Peoples Action, pushed a handful of bills regarding home foreclosure in the legislative session that adjourned May 31, but much of their agenda failed to pass as lawmakers grappled with state pensions, workers’ compensation, budget issues and more.
House Bill 1109, which would allow municipal governments to put liens on vacant properties owned by banks for failure to maintain the properties, died in committee. House Bill 1810 would have allowed the state to charge banks a $500 fee for each home foreclosure to go toward foreclosure counseling, but that bill also died in committee. The General Assembly did create a Foreclosure Prevention Program Fund to be supported by revenues from a major gambling expansion.
Contact Patrick Yeagle at email@example.com.