New proposed 'privilege tax' is aimed at investment bankers, but here's who it'll really hurt

Illinois may impose a “privilege tax” on people in the financial sector that would add a 20 percent levy on earnings for investment management firms. Kristina Rasmussen of Illinois Policy joined Tuesday's “The Morning Blaze with Doc Thompson” to explain why the tax would be detrimental to the Prairie State’s economy as well as to any “mom and pop” firms trying to stay afloat.

“People have lost their fear of man now,” Doc marveled. “They’re not even trying to hide their progressive ideas.”

HB 3393, which next goes to the Illinois House, “would hit partnerships and S corporations engaged in investment management services with a 20 percent tax on fees earned from their investment strategies,” according to Illinois Policy. Rasmussen summed up the big problem with the bill: “The last thing that Illinois should be doing is sending a signal to folks that we’re going to tax you for the ‘privilege’ of breathing in this state and drive folks out when we desperately need them here.”

The “privilege” levy was aimed at wealthy hedge fund managers and private equity partners, but its language is too broad for that goal and would likely impose the new 20 percent tax on small “mom and pop” firms as well, Rasmussen explained.

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