February 18, 2014
Business taxes are often a point of debate in discussions about raising state revenue. Like other taxes, business taxes have implications for administrative efficiency, vertical equity (“fairness”), economic efficiency, and revenue stability. Business tax burdens most often fall on the firm’s owner(s), its customers, its suppliers, or its employees.
Illinois uses the business tax similarly to most other states. The most important business taxes are the property tax and the sales tax. The corporate income tax accounts for a relatively small share of revenue and changes in the tax will do little to alter this.
New business taxes (such as a gross receipts tax, value-added tax or state-wide property tax on business) could provide significant additional revenue but might also have significant and difficult to predict implications for economic efficiency and tax fairness.
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