Kevin Price
Illinois' war on jobs
By Kevin Price
July 23, 2011

Illinois' Governor Pat Quinn ran on a platform that included raising taxes. In an era when politicians make many promises but comes through on few, Quinn is a man of his word. The Democrat is not only keeping his promise to raise taxes, but intends to do it beyond his campaign statements. His promises will likely shorten his stay in office and the people of Illinois will be the ones who suffer from his policies.

In spite of this, there is still celebration in the Midwest. Mostly in Wisconsin and Indiana, though. Indiana has been the one bright spot for business in the region, with a modest tax rate (relatively speaking) and a strict fiscal policy that has allowed it to enjoy positive job growth. Often mentioned as a possible presidential candidate, Indiana's governor Mitch Daniels will likely do a heavy lobbying effort to attract Illinois' businesses. Meanwhile, Wisconsin has a new GOP governor who ran on an anti-tax platform. He has already produced bumper stickers inviting people in Illinois to move to his state. The Daily Caller recently recognized the rewards of Wisconsin's pro-growth policies with an article that noted that" half of all US June job gains came from" that state.

The tax on Illinois business is far reaching indeed. The National Center for Policy Analysis notes that "Democrats in the Illinois House and Senate rammed through Governor Pat Quinn's 67 percent hike in the state income tax and a nearly 50 percent jump in the state corporate tax. The increase will add $1,400 to the average family's tax bill, and will not likely help job creation in a state that has lost 374,000 jobs since 2008." Although businesses do not pay taxes (they are simply a fixed cost of doing business which they transfer to their buyers in prices and quality), this increase is big enough to force many companies to shop around for a different home in order to keep their products and services competitive. I guess the only silver lining is that many who will be pounded with higher taxes will not be likely to keep their jobs long. Their employers will simply move away.

The NCPA also notes that "new Wisconsin Governor Scott Walker immediately rolled out a press release inviting Illinois businesses to decamp to the Badger State, contrasting his agenda to reduce taxes and welcome business with the Illinois increase. Indiana Governor Mitch Daniels added: 'We already had an edge on Illinois in terms of the cost of doing business, and this is going to make it significantly wider.'" Daniels also went on to say that living by Illinois was like being neighbors with the Simpsons.

The cost of business (and those who benefit from them in employment) will be huge. The Wall Street Journal notes that "Illinois' small businesses will pay the new 5 percent income tax rate, up from 3 percent, and the effective corporate tax rate will rise to 9.5 percent, which, when combined with the federal rate of 35 percent, will make the Land of Lincoln one of the most expensive places in the world to conduct business." Take note that was in the world. The US, on its own, already has the second highest tax rate in the industrialized world. The state of Illinois becomes number one in that dubious distinction with its far reaching tax bill.

The Wall Street Journal adds that the "Democrats say the higher rates will raise $7 billion to help close an estimated $14 billion budget gap, though tax hikes rarely raise the revenue that politicians promise." These politicians might do well to learn the lessons of the 111th Congress, which raised taxes seven times and spending was at 150 percent of the revenue increases. In other words, tax increases led to bigger deficits. But this is not the only cause of deficits. Such taxes have the effect of killing the goose that lays the golden egg — or at least chasing them off to other states. Those places become the beneficiary of the revenues those companies produce.

It is time for state governments to wake up and realize that there are no tax increase solutions to the fiscal crisis facing the states or the federal government. Rather the solution will be found in less spending and actually lower tax rates (as a way of attracting and creating revenue generating businesses). The quicker governments figure such out, the better off we will all be.

© Kevin Price


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Kevin Price

Kevin Price is Publisher and Editor in Chief of

His background is eclectic and includes years of experience in both business and public policy, as well as two decades of experience in broadcast journalism. He was an aide to U.S. Senator Gordon Humphrey (R-NH) and later went on to work in policy areas with some of the nation's leading think tanks including the National Center for Public Policy Research and was part of the Heritage Foundation's Annual Guide to Public Policy Experts... (more)


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