Small businesses see record profit growth but face headwinds in Illinois
CHICAGO (Illinois News Network) — Small businesses across the country are optimistic about the economy, but one expert says there could be dark clouds building in Illinois.
The new Small Business Optimism Index, issued by the National Federation of Independent Business, shows a record level of small businesses seeing profit growth. The number reporting poor sales fell to a near record low. Mark Grant, Illinois director of the NFIB, said, for now, the sentiment is shared here.
“I talk to our members quite a bit,” Grant said. “The vast majority of them feel very good about things. They see the same things every other small business around the country sees. They’re very enthusiastic and trying to grow and hire employees.”
That optimism is tempered by potential actions in Springfield that could affect small business owners, Grant said.
“They know there’s a good chance there could be more tax increases coming,” he said. “That’s what they are probably most concerned about. The state’s got an enormous pension debt. There’s always an appetite over at the statehouse to tax and spend … or pay off debt.”
J.B. Pritzker, the Democratic candidate for governor, has called for a temporary hike in Illinois’ flat income tax rate. He then wants lawmakers to work to change the state constitution to allow for a progressive income tax, which would include several different rates, depending on income. Grant said that could have consequences for many small business owners.
“The majority of small businesses are formed as pass-through entities, so they actually pay their business taxes on the individual rates,” Grant said. “They would feel the most significant impact from any kind of tax increase that would come from that graduated tax.”
Pritzker also supports raising the minimum wage in Illinois to $15 dollars per hour. Grant said that kind of hike would be a disaster.
A bill to raise the Illinois minimum wage to $15 an hour by 2022 passed the Illinois Senate and House last year, but was vetoed by Gov. Bruce Rauner.
“I know our small business folks are always wary of government-mandated anything, but a government-mandated price hike on labor? A 70 percent to 80 percent increase, even over a two-to-five year period, that’s really tough for any small business to manage and stay healthy,” Grant said.
Grant said tax relief from Washington helped many accommodate the tax hikes that took effect last year in Illinois.
“The federal tax reform bill probably came at just a great time for them because of what the state was doing by increasing taxes on both the pass-through and the corporate side,” Grant said. “C-corps are paying close to that 10 percent number and that’s pretty expensive.”