Synopsis As Introduced Amends the Illinois Income Tax Act. Imposes a privilege tax at a rate of 20% on partnerships and S corporations engaged in the business of conducting investment management services, until such time as a federal law with an identical effect has been enacted. Provides for the determination of the tax due; defines "investment management services". Effective immediately.
House Committee Amendment No. 1 Provides that the privilege tax shall be imposed beginning on July 1, 2017. Provides that the tax shall be imposed at the rate of 20% of the fees earned from the investment strategy of the investment manager and not from the investment itself (in the introduced bill, at the rate of 20%).
State Debt Impact Note, House Committee Amendment No. 1 (Government Forecasting & Accountability)
HB 3393 (H-AM 1) would not change the amount of authorization for any type of State-issued or State-supported bond, and, therefore, would not affect the level of State indebtedness.
HB 3393 (H-AM 1) will not impact any public pension fund or retirement system in Illinois.
Balanced Budget Note, House Committee Amendment No. 1 (Office of Management and Budget)
This surcharge would add an undetermined increase in administrative costs to the Department of Revenue's (DOR) budget. The Department of Revenue estimates that this surcharge has the potential to raise revenues based on current activities, but due to potential impact on market behavior, DOR does not have an estimate of revenues. It is expected that the revenue would offset administrative costs.
Fiscal Note, House Committee Amendment No. 1 (Dept. of Revenue)
If it were determined to be constitutional, the Department of Revenue estimates that in the longrun, this bill would raise no new revenue for the State. Due to the magnitude of the tax, this bill would elicit a strong behavioral response from would-be taxpayers. Taxpayers would be strongly incentivized to either reclassify fees so as not to be considered "investment strategy" or to relocate the taxable activity so that it is beyond the reach of the State. In the unlikely event that this were to be implemented before taxpayers could respond, however, the surcharge could raise as much as $1.7 billion for a full 12 months of implementation.
Housing Affordability Impact Note, House Committee Amendment No. 1 (Housing Development Authority)
This bill will have no effect on the cost of constructing, purchasing, owning, or selling a single-family residence.
Judicial Note, House Committee Amendment No. 1 (Admin Office of the Illinois Courts)
The proposed legislation would neither increase nor decrease the number of judges needed in the State.
Home Rule Note, House Committee Amendment No. 1 (Dept. of Commerce & Economic Opportunity)