Comptroller
Springfield,
Illinois 62706
Mr.
Joseph R. Oldani
Rural
Route One
Manhattan,
Illinois 60442
Dear
Mr. Oldani:
As I indicated to you
in my letter dated
April 14, I asked my chief economist to
study the percentage of personal and corporate income in Illinois devoted to
property taxes.
I
am informed that two problems arise in trying to make these estimates. Corporate
income data is not available for Illinois since corporations with multi-state
operations report their profits on a nationwide basis, and the Department of
Revenue does not separate business property tax payments from individual
property tax payments.
The
only way to measure corporate income earned in Illinois is to base the estimates
on Illinois corporate income tax collections. The state requires companies
earning multi-state income to allocate their income to Illinois according to the
share of their sales, assets, and payroll located in Illinois. For calendar
1977, Illinois taxable corporate income computed from corporate tax collections
adjusted for overpayments as reflected in refund data equalled $10.148 billion.
Taxable
persona1 income in Illinois for 1977 also computed from tax collections also
adjusted for refunds equalled $58.627 billion. This is substantially less than
the personal income for Illinois reported by the U.S. Bureau of Economic
Analysis since taxable personal income excludes deductions and income not
subject to income taxes.
The
Advisory Committee on Intergovernmental Relations (A.C.I.R.) has done a study of
the breakdown in property tax payments between business and individuals for
1977. The A.C.I.R. found
that of an estimated $3,188.5 million in real and personal property taxes paid
that year $1,256.3 million was paid by non-farm businesses, $1,649.5 million was
paid by individuals, and $282.7 million was paid by farmers.
For
1977, the ratio of business property tax payments to business taxable income was
12.4%. The ratio of personal property tax payments to taxable personal income
was 2.8%. One reason the business ratio is so much higher than the personal
ratio is that businesses still paid the personal property tax in 1977. Finally,
these ratios should not be looked on as tax rates since property tax payments
are counted as a cost of doing business and are deducted from business revenues
when computing taxable business income.
Return
to Senate Testimony
Sincerely,
Note: Mr. Burris’s Signature was
Comptroller