This Clown wants re elected and he is doing this to Buisness? Any Non Democrat can do better. I would trust a business man any day. He would know how to run the State!
Despite protests from business and the bill's own sponsors, Gov. Pat Quinn recently signed an obscure change in state insurance law, quietly taking away a distinct tax advantage the state offered for large companies headquartered in Illinois.
Drafted by the Department of Insurance, the bill's innocuous technical language apparently masked its real impact—an estimated tax hike of at least $100 million a year, according to a business group—until after the House and Senate passed it unanimously.
Some of the state's largest companies, such as United Continental Holdings Inc., Boeing Co. and Archer Daniels Midland Co. are now complaining that the Quinn administration pushed through a big new tax in such a way that it drew no opposition. Even the bill's sponsors asked the governor to veto it, saying they were surprised to learn that the new tax hits the many firms that insure themselves using wholly owned “captive” insurance subsidiaries.
Mr. Quinn, who signed the measure Aug. 15, is in the midst of a fierce election battle in which Republican challenger Bruce Rauner has argued that Illinois needs to be a more competitive place to do business, while Mr. Quinn has said the state needs more revenue.
In a statement, a spokesman for Mr. Quinn defends both the tax hike and the administration's role in promoting economic development.
“Illinois leads the Midwest by a large margin in business creation,” according to the statement. “As Illinois' economy is driving forward under Gov. Quinn, we are pleased that new sources of job growth and innovation are emerging, such as biotech, advanced manufacturing and clean energy.”
The state's new 3.5 percent premium tax on payments to captive insurance subsidiaries—which in some cases could be as high as 4.6 percent—”easily” will raise at least $100 million a year for the state, according to an estimate by Mark Denzler, a lobbyist at the Illinois Manufacturers' Association.
Previously, there was no tax at all, making Illinois one of a few tax-free states for the use of captives, which large companies commonly set up to self-insure their risks.
Initially, the Insurance Department said the state had no revenue estimate for the tax hike. A spokesman later said the law would raise $5 million to $15 million a year, based on a Department of Revenue estimate. He declines to elaborate.
“It's just another frustration companies have with Illinois,” says Mr. Denzler, IMA's vice president and chief operating officer. “They're saying, 'Now I have to pay $5 million or $10 million more a year than my competitor in Indiana or elsewhere.' “
The association is a major supporter of Mr. Rauner, but criticism of Mr. Quinn's action is coming from all the major business groups in the state as well as the nonpartisan Taxpayers' Federation of Illinois, a business-backed group.
VETO URGED
Even the Council on State Taxation, a Washington-based business group that promotes tax fairness among states, urged a veto.
“It was positioned as a technical amendment when, in fact, it was a tax increase,” says Douglas Lindholm, the council's president and executive director.
The bill's chief sponsor, Sen. William Haine, D-Alton, chairman of the Insurance Committee, was “surprised to learn” the bill taxed payments to captives, according to his spokesman.
A Department of Insurance memorandum urging support of the bill in the House, which the governor's office provided to Crain's, says nothing about closing loopholes or taxing payments to captive insurance companies.
“It was several weeks after it passed before somebody caught it,” says Carol Portman, president of the federation, who ruefully recalls not seeing any red flags when she briefly looked at the bill.
Mr. Haine, along with former Rep. JoAnn Osmond, R-Gurnee, the sponsor in the House (who retired July 1), asked Mr. Quinn to veto the bill entirely or issue an amendatory veto excluding captive insurance companies from the tax.
The number of Illinois companies that use captive insurers could not be determined, but many midsized firms also use the strategy. Captive insurance often is cheaper than policies purchased from outside insurers.
Illinois has hundreds if not thousands of firms using captives, says Michael Mead, president of M.R. Mead & Co., a captive consulting and management firm in North Riverside. “Any business of any consequence in Illinois has a captive.” But he says enforcement will be difficult and the new tax probably will bring in more like $25 million to $30 million.
Ostensibly, the measure was aimed at companies that don't use a broker to buy special kinds of insurance from companies that are not licensed in Illinois. These “nonadmitted” insurers commonly cover large, nonstandard risks, and the policies they issue are called surplus lines.
CLOSING LOOPHOLE?
In Illinois, surplus line brokers pay the premium tax, which then can be passed on to the company paying for the insurance. The bill was supposed to make it clear that if no broker is involved, the company that buys the insurance still owes the tax. The problem is that the bill applies the 3.5 percent tax to all transactions with unauthorized insurers, which also includes captives.
The Quinn administration calls the exemption for captives a “loophole,” which the law closes.
In a separate statement, the Department of Insurance says, “This law requires corporations to pay the same taxes on certain special insurance policies that individuals and small businesses in Illinois currently pay.”
The law puts Illinois on an equal footing with other states that have similar taxes, the department says.
For Mr. Haine, chairman of the Senate Insurance Committee, the goal now is to nullify the new law in this fall's six-day veto session, his spokesman says. But no one can predict whether the governor, post-election, win or lose, will sign a measure to repeal a bill he just signed.
http://www.chicagobusiness.com/article/20140830/ISSUE01/308309964/amid-re-election-fight-quinn-pushes-through-a-tax-on-business
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