Governor Blagojevich's Gross Receipts Tax Plan Represents Largest State Tax Increase This Decade

During his recent State of the State Address, Governor Rod Blagojevich of Illinois proposed the "Illinois Tax Fairness" plan. While the plan would phase out the corporate income tax over four years, it would also institute a new gross receipts tax on businesses which is forecast as a net tax increase of $6 billion.

The new tax would be problematic not only because of the additional tax burden it would impose, but also because of the way in which it would do so. Gross receipts taxes are one of the most economically damaging ways for states to extract revenue, and economists from all ends of the political spectrum are nearly unanimous in their opposition to them.