Share and enjoy:
And also from reader MB, some bumper stickers we'd like to see:
- Even Nixon Resigned
- We Need a President Who's Fluent In At Least One Language
- The Republican Party: Our Bridge to the 11th Century
The U.S. Olympic Committee has announced that Chicago will represent the U.S. in the competition to host the Olympic Games in 2016. Since the entire world universally loves the U.S. right now, I am certain today's announcement means Chicago is hosting the Olympics. Just not in 2016.
All right, I admit, sometimes I really hate Chicago's weather. Parker, who has never experienced a really hot Chicago summer (though he probably experienced some serious heat on the farm near his birthplace in Carbondale, Ill.), seems to enjoy it:
Yes, folks, it's snowing in April. And because it's just above freezing, the snow is heavy, wet, and slushy. Parker took one look out the door this morning and bounded into the yard like...well, like a puppy.
Bad news, P-dogg: no play group tonight. It will be challenge enough to get the mud off you after your evening walk.
People who live outside Chicago may not believe this: Yesterday's high temperature was 21°C; right now, it's -1°C. Who knows what tomorrow will look like.
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.
My thoughts
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
Evanston, Ill.
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.
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.
Parker is jumping for joy at the weather:
Today's temperature has already hit 21°C and it's still rising. Also of note, last night was the first night since January 12th that Chicago's temperature did not go below freezing.
Happy spring!
In related news, Ravinia Festival has decided to reconfigure its schedule because of the 17-year cicadas that start singing at the end of May this year. The Daily Parker anxiously awaits Parker's reaction to the bugs.
The overnight low temperature in Chicago has dropped below freezing every night since January 12th. This is the longest stretch of below-freezing nights in at least seven years. It's getting really quite old.
That is all.
It seems the weather forecast was correct: The 10 am (1600 UTC) temperature at O'Hare was 2°C, the first time it's been above freezing in Chicago since January 27th, and only the third time since January 15th.
I'm going to go outside and bask in the warmth right now...
It's possible that the temperature in Chicago could go above freezing this afternoon for the first time since January 27th. This is the longest stretch of below-freezing weather we've had since I returned home in 2000. Hey, I like records as well as the next athlete, but I'm pretty tired of this one.
Stay tuned.