My accountant, Linda Forman, sent me this note on the Illinois Gross Receipts Tax proposed by Gov. Blagojevich. Now, I voted for the man twice, and I voted for my state senator (who also supports the proposal) twice, but if they go ahead with this proposal I'm not sure I will continue to support them:
The Gross Receipts Tax Proposal
There are thoughtful people in the political arena mulling over the proposal of a gross receipts tax and the prospect of health care coverage for the uninsured employees in Illinois.
While debate goes on, I would like you to visit with a company or two that could be a composite of many small business clients.
The Service Company
Currently, a service company employs 40 people and provides health care and life insurance, fringe benefits and a generous profit sharing plan.
It funds the fringe benefits and profit sharing with some of the $300,000 in profits it realizes on its $6,000,000 in service sales.
Oh, did I mention that the business owners would like some income each year from their capital investment in the company. That usually is a 9% return, or $90,000.
So the $300,000 in yearly profits is put to good use – excellent employee benefits and a reasonable rate of return on capital invested. This is a growing company. It pays taxes on its net income, pays various business taxes to the state and community and keeps 40 people on the tax rolls. It also uses the services of other Illinois businesses, contributing to a vital economy.
Under the gross receipts tax proposal, the $6,000,000 gross income will be taxed to the tune of $300,000. So there goes the profit that funded employee retirement plans and kept investors happy. BUT now, other businesses that provide service to this company have also raised their rates to cover the gross receipts tax, so this company is now operating at a LOSS. And it has lost its competitive pricing edge.
When companies operate at a loss, their usual options are:
- Lay off employees
- Cut benefits
- Move to a more business friendly area
And this helps Illinois’s economy HOW??
- More unemployment compensation payments.
- More uninsured workers? Loss of tax revenue from income taxes.
- Loss of a productive business if it moves out of state.
Raising “prices” may work for government, but in this global economy, it is often NOT an option.
The Widget Company
The Widget Company competes with other widget makers, striving to make a good quality product at a competitive price. It has made a commitment to stay in Illinois, even though the state has hiked fees in the past. The corporate income tax is 7.3% of net income, certainly a significant tax but bearable, since net profit is only 4% of gross receipts of $6,000,000; the tax is approximately $17,000.
The company’s margins on its product lines cover the administrative and sales overhead. If it had to raise prices 5% to cover the gross receipts tax, it would lose business in a market where customers are swayed by even the slightest rise in price.
If the company has to pay a gross receipts tax of 5%, it would have to pay $300,000!! But its net profit is only $240,000 so it would be $60,000 in the hole. This is a company that is going to MOVE out of Illinois to a warmer climate in a state where business is appreciated. What other choice does it have – it can’t pass along the costs to consumers while dealing in a global marketplace.
The gross receipts tax idea is just that - GROSS. It will repel new business and seriously impede current business growth. There has to be an analysis of WHY some large corporations are not paying tax, since the formula for paying Illinois taxes is based on a factor of Illinois sales to total sales. And there has to be a corollary analysis of what other taxes big business is paying to Illinois, since other fees on businesses have risen sharply in this administration.
I have clients who will be severely impacted by a gross income tax - and attempts to remain in Illinois and deal with the tax will only result in loss of jobs and benefits for their employees.
There has to be an intelligent game plan - and we need more information from the governor before we can assess where the issues are.
AND, with regards to an expanded Illinois health care plan, I think a good health plan needs to be national in scope and administered like Medicare - and that the state of Illinois, in its precarious financial position, can't take on health care while it has to correct huge pension and other funding deficits. And given the historically poor reimbursement payment rate and lateness of payment, where will Illinois find the health care providers to accept families covered by the proposed health insurance plan?
Linda Forman, CPA
By the way, no, Inner Drive Technology is not the service company she mentioned, as much as I might wish for $6 million in revenues.
Update, 8:49 am: Linda adds the following:
The gross receipts tax rate may have lowered in discussions since this was first written, but the concept is still there, along with the health insurance issue. Actually many companies are toying with the idea of dropping their coverage and only paying the state's 3% rate, which will cause a larger population to be in the state's insurance fund - another negative result of this proposal.
On Sunday I posted about catching a dog running loose in town. This afternoon I spoke with the local animal shelter to see if she had gotten back home.
Short answer: no.
It seems that Sandy, the slightly-overweight, very sweet beagle mix that Parker and I collared, is a regular visitor to the shelter. Six times, in fact. And each time, the owner gets cited, and each time, the owner takes several days to collect her. Sandy also has a brother, who is also a slightly-pudgy, very sweet beagle mix, whom the owner has voluntarily surrendered to the shelter. As soon as he's neutered—he's about 7—they'll put him up for adoption. The shelter also told me that they're about to send Sandy's owner a 24-hour notice, saying essentially "get your dog today or we're keeping her."
I had assumed that her owner would be worried about her, given that she had current tags and all. But no, the owner isn't worried, not one whit. Not even worried that someone (me) picked the dog up half a mile away and across a major street from home. Apparently the only reason Sandy had current tags is that the shelter won't release a dog without them, even if she comes in stray, so Sandy only got those from previous visits to Hotel Hound.
So, if you know anyone who wants a really sweet but slightly pudgy beagle-ish dog—or two—drop me a note and I'll put you in touch with the shelter.
Oh, yeah, here's the irony: if Sandy had an ID tag around her neck, I would have dropped her off at home, and the owner would not now be facing yet another citation. Then again, this will probably work out better for Sandy and her brother in the long run.
This has to hurt:
While doing routine maintenance work, [a] technician accidentally deleted applicant information for an oil-funded account — one of Alaska residents’ biggest perks — and mistakenly reformatted the backup drive, as well.
There was still hope, until the department discovered its third line of defense, backup tapes, were unreadable.
The article said "no one was blamed." Right.
I meant to put this photo up earlier. A week ago Monday, just three days after he had a nice bath, the warmer weather gave Parker a field of mud to play in:
You should have seen the other guy. At least Parker has black fur; some of his friends showed the dirt a lot better on their white coats.
Four years. We weren't even in World War II for this long. I can't add anything really profound to the debate, but I will repeat something Garry Trudeau had on today's Doonesbury Daily Dose:
"America has been conducting an experiment for the past six years, trying to validate the proposition that it really doesn't make any difference who you elect president. Now we know the result of that experiment."
—Gen. Tony McPeak (retired), member of the Joint Chiefs of Staff during the Gulf War
I would also like to point out that the recent spate of confessions from people our government has tortured might carry more weight if the men hadn't also confessed to assassinating the Archduke Ferdinand.
Finally, not that this should surprise anything, the New York Times is reporting today the White House watered down government reports to influence the debate on climate change:
In a hearing of the House Committee on Oversight and Government Reform, the official, Philip A. Cooney, who left government in 2005, defended the changes he had made in government reports over several years. Mr. Cooney said the editing was part of the normal White House review process and reflected findings in a climate report written for President Bush by the National Academy of Sciences in 2001.
No more than 672 days, 2 hours, and 44 minutes remain in the Bush Administration.
I think we have our answer:
I can confidently say that Parker will probably hit 22.6 kg, and not much bigger. Of course, with the amount of dirt and sticks he eats, you'd think he'd gain. Then again, that's mostly fiber...
Parker has a new behavior.
In my last apartment, Parker would signal his need to go outside by digging at the carpet and whining. At my new apartment, he did the same. But something interesting has happened: Parker has developed, all on his own, a new signal, which he used yesterday about 428 times:
Once he discovered his new power, he wanted to go outside all day. And, as you can predict, once outside he barked to come in. It was tons of fun—for him. So my next step is to figure out how to reduce the behavior to manageable levels.
Yesterday, Parker and I were walking to his afternoon play group meeting when we encountered a beagle-basset-looking dog wandering the streets. I tethered Parker and followed the other dog until she tired of the "keep away" game we had been playing. She had county rabies tags, and a current city license tag, but no other identification.
She most likely lived nearby. She was sweet and friendly, got along with Parker just fine, and waited with us patiently for Animal Control to arrive. But then she had to go to the animal shelter, probably for the night, and her owners probably went crazy looking for her until they (one hopes) got a call from the shelter this morning. The county has no record of what dogs go with what tags; they can do nothing more than confirm the tags are authentic. The city does keep identity records, but the police do not have access to them. Only the animal shelter does, but I'm not sure how, and if they need to talk to someone at City Hall then they're going to be S.O.L. at 5:30 on a Saturday afternoon.
Look, if you own dogs, put ID tags on them. Had this little dog had a phone number on her collar, she would have gotten home probably within ten minutes. It's great that the owners had her rabies shots and city tags up to date, but come on, spend $5 at Petco or Petsmart and get a name tag made. Even microchipping isn't enough, because the shelter may not use the same system that your dog's chip uses.
Think, people: your dog does not know your phone number, and couldn't tell someone even if she knew it.
After only five minutes of tug-of-war with Parker, I had to throw in the towel. Or, what was left of it, anyway:
After the first loud ripping noise (15 seconds into the game), I figured, in for a penny, in for a dime.