As state lawmakers prayed, celebrated a new gubernatorial inauguration and passed historic tax increases this week, Oak Lawn entrepreneurs and independent businesses prayed that they can keep their doors open another month in dismal economic landscape.
With just hours left until a new General Assembly was sworn in, the state Senate passed a 66 percent personal income tax increase early Wednesday morning. The Illinois House voted late Tuesday.
Rates would go from 3 percent to 5 percent for individuals. For a family of four making $40,000, that would amount to an extra $800 paid to the state every year. The corporate income tax will go from 4.9 percent to 7 percent, Illinois Statehouse News reported.
The tax increases, effective immediately, are purported to last only four years before reverting back to prior levels. Money from the added tax revenue will also be used to pay off the state's $15 billion budget deficit. The bill now awaits Gov. Pat Quinn’s signature, and he's likely to sign.
Local business owners are already worried about losing what little profit gains they’ve made—if any—since the country found itself in the midst of a historic recession over two years ago.
“Personally, I am only days, weeks away from closing the business as it is,” said Chad Reno, owner of Cornerstone Café at 5177 W. 95th St. “I’m hanging on by a thread. I can’t see finding more money to pay out.”
Reno said he has already had to downsize staff to only a few employees at his cozy restaurant that offers a wide variety of comfort food and brick-thick milk shakes.
“I’ll have about three or four when I’m done,” he added.
Glen Kato, a board member of the Oak Lawn Chamber of Commerce and web designer, said the tax increases would affect neighborhood businesses’ abilities to continue supporting local charities that are also struggling to maintain donors.
“The economy is bad so people don’t have as much money as they normally would,” Kato said. “Now with taxes going up, it cuts into the profits that businesses make because they can’t pass it along to the public and still be competitive. Businesses have less to donate to Little League and other organizations, and they have less money of their own to spend.”
Kato, who had a nice business designing elegant websites for many area merchants and small companies, has also watched his business “virtually dry up” as clients tightened their belts.
“People just don’t have the money to redo their websites,” Kato said. “They’re struggling and trying to pay their necessities, mostly utilities and their staff … I think this tax increase is going to be devastating to businesses that are already on the edge.”
John Crivellone, another chamber board member and owner of Security Associates, feels there is more that Quinn can be doing to bring the state’s $15 billion deficit in check besides hiking taxes.
“It’s so excessive, it’s comical,” Crivellone said. “We’re in the middle of a recession right now. Any expert on economics will tell you this will be so detrimental to the economy that it would be like putting nails in a coffin for the small businessman.
“I have a small security firm, we sell security cameras and security systems. It’s been slow. Most people have gone into a bunker mentality, they only pay their essentials, mortgage, phone, etc.”
For George Rock, co-owner of Every Good Gift at 10336 S. Cicero Ave., the new tax hikes are a surefire way to kill job growth. While he would love to hire more people at his store that specializes in personalized gifts and embroidery services, the tax increases are putting those plans on hold.
“To me, it’s just so counterproductive it’s ridiculous,” Rock said. “I characterize it as a very lazy way to approach this. It’s uninventive and they should be looking for ways to increase efficiency and they’re not bothering.”
Illinois smokers, however, caught a break. The House failed to pass a $1.01 tax increase for a pack of cigarettes.