Investors will go back to flying past Illinois if tax passes, finance pro says
Now that investors are finally looking at opportunities in Illinois, the Democrats in the Senate want to shut them out, Maura O’Hara, executive director of the Illinois Venture Capital Association, told the Chicago City Wire recently.
Senate Bill 1719 would impose a so-called “privilege tax” of 20 percent on fees earned by investment managers. It passed the Senate in May but by the end of the special legislative session on July 6 had been sent to and remained in the House Rules Committee.
“SB1719 is one of the most supremely short-sighted pieces of legislation we’ve ever seen in Illinois,” O’Hara said. “As those of us who have been around for a while know, Illinois has only recently become a desirable VC (venture capital) market. We used to be a flyover state for investors from the coasts. Since 2011, 587 Illinois companies have received $15.7 billion in equity investments. Now that local entrepreneurial ecosystem has finally achieved some success in the vicious cycle of investing and reinvesting in early-stage companies, the state Senate wants to run the successful job creators out of town.”
According to reports, SB1719 gained wide-ranging support from Democratic leaders like 2018 gubernatorial candidate Sen. Daniel Biss (D-Skokie).
But Republicans in both chambers as well as Gov. Bruce Rauner have vowed to stop the legislation at all costs.
“Imagine the impact on Illinois’ tax revenue if even half of those people choose to move to a more tax-friendly state,” O’Hara said. “Rather than bringing in any additional revenue, passage of SB1719 will reduce tax revenue significantly.”
Stakeholder groups and advocacy organizations like O’Hara’s have also voiced widespread opposition, including the Illinois Chamber of Commerce, the Chicagoland Chamber of Commerce, the Taxpayers Federation of Illinois and the Illinois Bankers Association.