Blagojevich questions Jackson's opposition to tax plan

Illinois Gov. Rod Blagojevich. (AP Photo)

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ROCKFORD (AP) - Businessman Duntai Mathews knows it's important to have healthy employees at his small woodworking company, it's finding the money to pay for their medical insurance that's the problem. So Mathews and his family go without insurance and he doesn't offer it to his 11 employees either. "I need it," said Mathews, who is backing Gov. Rod Blagojevich's $7.6 billion business tax plan to make access to health care affordable in Illinois and generate money for schools and property tax relief. Mathews said private insurance companies want to charge him $6,200 a month to cover his employees and Blagojevich's plan to offer low-cost health insurance for workers would do it for $2,800 a month. But Blagojevich's tax plan has outraged many other business owners, who predict it would force them to raise prices and cut jobs. Mathews' business would be exempt from the new "gross receipts tax" because he has less than $2 million in annual sales. Mathews' Rockford factory was one of the stops Blagojevich made Monday after setting out from Chicago on a four-day tour of the state to promote his plan. Blagojevich said Monday he's ready for "the fight of the century" over the new business tax, and he suggested critics such as the Rev. Jesse Jackson are responding to pressure from financial supporters. "I just am dying to have this fight, because it is long overdue," he said. But Blagojevich said gloom-and-doom predictions from businesses are a smoke screen to cover the business community's real goal: raising income and sales taxes on working families. "Hit the road," he said to business groups. "We will not raise taxes on the working people of Illinois." The plan has other critics as well. Jackson and the Chicago Urban League question its impact on small, minority-owned businesses. Blagojevich said in an interview with The Associated Press that Jackson has changed his tune since earlier this year, when the governor said the two men talked and Jackson "thought it was a fantastic idea." "I think he's getting calls from his contributors," Blagojevich said, noting that he and lawmakers are getting the same pressure to "go easy on contributors and have an unfair tax system and screw your constituents." Jackson told the AP that he and Blagojevich talked about major companies paying little or nothing in income taxes and the need for more health care but never discussed details of a tax plan. Jackson said his objections to the governor's plan are not in response to any pressure. "We've looked at the numbers, that's all," he said. "We who are his supporters are asking for a tax policy that will stimulate businesses, not eliminate them," Jackson added. The governor took a more conciliatory tone toward lawmakers who oppose his business tax and instead want to raise income and sales taxes while lowering property taxes. "We're asking them to get off of an idea that they've supported for a long time," Blagojevich told the AP. The tax, the largest in Illinois history, would apply to almost all business transactions. Blagojevich has recently revised his proposal so it would generate $7.6 billion instead of $6.3 billion, with the additional money going to property tax relief. Under his "gross receipts tax," businesses selling merchandise would pay 0.85 percent on any money they take in. Service businesses would pay 1.95 percent. Business with less than $2 million in annual sales would be exempt. Blagojevich plans to visit Peoria, Alton, Marion and other cities to highlight groups and businesses that he argues would benefit from his proposal. Monday's events included a kickoff rally at Chicago's Navy Pier, mingling with an invitation-only crowd at an Elgin restaurant and speaking at Mathews' Rockford business, DLM Manufacturing. Blagojevich says Illinois businesses don't pay enough taxes and could absorb the new tax without passing it along to customers. The Chicago Democrat repeated his vow to veto any increase in the income or sales tax, even if the money would be used to achieve his goals of universal health care and better schools. He argued the taxpayer would end up getting those services but paying a bigger tax bill. "So he's basically running in place," Blagojevich said. "We have not improved his life." Dyanna Chandler used the same logic to question Blagojevich's plan. The 59-year-old self-employed grant writer attended Blagojevich's Rockford appearance because she needs health insurance and wanted to hear more about his plan. But she fears the new tax would increase her costs. "Does that just filter down to me?" she asked. "Then I haven't gained anything." --- Associated Press Writer Christopher Wills in Springfield contributed to this report. © Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.