January 13, 2011
Indiana and Wisconsin Court Illinois Businesses Fleeing 66% Individual and 46% Business Tax HikesWall Street Journal editorial, Illinois Exit Fee:
Jubilation has broken out in the Midwest—or at least in Wisconsin and Indiana, now that Democrats in neighboring Illinois have rushed their tax increase into law.
Late Tuesday night, Democrats in the Illinois house and senate rammed through Governor Pat Quinn's 67% hike in the state income tax and a nearly 50% jump in the state corporate tax. The increase will add $1,400 to the average family's tax bill, and we doubt it will help job creation in a state that has lost 374,000 jobs since 2008.
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."
That's for sure. Small businesses will pay the new 5% income tax rate, up from 3%, and the effective corporate tax rate will rise to 9.5%, which, when combined with the federal rate of 35%, will make the Land of Lincoln one of the most expensive places in the world to conduct business.
- Bloomberg, Illinois's Record Income-Tax Increase Divides Businesses and Investors
- Christian Science Monitor, Why Illinois Lawmakers Passed 66% Income-Tax Hike
- CNN, Illinois Tax Hikes Will Hurt Companies
- L.A. Times, Illinois Gov. Pat Quinn Delighted With Whopping 66% Income Tax Hike
- New York Times, Questions Persisting as Illinois Raises Taxes
- Reuters, Illinois, a Kleptocracy in Action
- Tax Foundation, Illinois Approves Sharp Income Tax Increase, Third-Highest Corporate Tax Rate
- Tax Foundation, Illinois Tax Increases Will Undermine Job Growth and Economic Recovery
- Tax Update Blog, Illinois Jacks Up Income Tax; Still Broke
- Wall Street Journal, Illinois Braces for Tax Increases
- Wall Street Journal, Wisconsin 1, Illinois 0: With Springfield Raising Taxes Amidst its Fiscal Disaster, the New Republican Governor of the Badger State Is Telling Illinoisans, "Escape to Wisconsin"
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The death knell has been sounded for Illinois small business by Mr. Quinn. We will relocate.
The higher tax rates have to be absorbed somewhere by small business. That may mean letting some employees go, or increasing customer prices.
The unemployment contribution rates have already been increased (the minimum rate as well as the wage limits).
If our Illinois vendors increase our prices, we will be forced to buy from out-of-state vendors.
We have beem a small business in Illinois for many years. We give up. All of the high taxes, income, real estate, unemployment, sales tax...we're leaving.
P.S. Uline had the forsight to relocate already to Wisconsin.
Posted by: John | Jan 14, 2011 9:54:19 AM
Neighboring states gleefully plotted Wednesday to take advantage of what they consider a major economic blunder and lure business away from Illinois.
"It's like living next door to `The Simpsons' -- you know, the dysfunctional family down the block,' Indiana Gov. Mitch Daniels said....
Posted by: Woody | Jan 14, 2011 10:42:50 AM
Looking back,just think what the Illinois tax problem would have been if their tarnished executive had landed the 2012 Olympic games.So long as the voters of Illinois keep putting the same theives in charge,there is little hope for change.
Posted by: John Calomiris | Jan 14, 2011 11:32:36 AM
I left Illinois in the mid 90's to relocate to Texas. Wisconsin's and Indiana's govenors are a bit disengenious since their tax rate has yet to be reduced. Both Wisconsin and Indiana have higher corporate income-tax rates than Illinois'.
Come on down to Texas, folks!!!!!
Posted by: RetiredE9 | Jan 14, 2011 11:33:11 AM
The Dimocrats just can't help it. Dysfunctional is hardly a proper adjective to explain what these dolts are thinking. No matter what statistics show in black and white, they are bound a determined to further strangle individual wealth building and certainly corporate advancement. Businesses equal JOBS, dunderheads! Business equals cash injected into the economy!
Well - what should we expect from Marxists. Rhetorical question, obviously.
Posted by: Bruce | Jan 14, 2011 11:40:25 AM
I wonder when Boeing will move (again)???
Posted by: dorf | Jan 14, 2011 11:46:56 AM
Gov. Daniels has noticed the capitol of Illinois is Springfield.
Posted by: Gumlegs | Jan 14, 2011 11:52:16 AM
Wouldn't Wisconsin's case be easier to make if they didn't have a 7.75% individual income tax on income over $220K?
Where I live in beautiful New Hampshire, we have no income tax or sales tax and only a 0.75% business tax. Most of state revenue comes from property taxes.
Posted by: Glenn Howes | Jan 14, 2011 11:52:45 AM
Come to Texas--we have lower taxes, PLUS less regulation, lower housing prices, lower energy costs, lower cost of living, AND no more blizzards!
Posted by: Frisco Kid | Jan 14, 2011 12:10:45 PM
Not only is the tax increase terrible policy, it was also done in a patently undemocratic and dishonest way. Passed by a lame duck legislature that ignored the electorate's desire for smaller government, and signed into law by a governor who promised to veto any increase so large. My husband and I are starting plans to move elsewhere -- Illinois is no longer a friendly place for hard-working people.
Posted by: Jessica | Jan 14, 2011 12:25:58 PM
I guess there was no repeal of the "Law of Unintended Consequences"
Posted by: Neo | Jan 14, 2011 12:26:56 PM
Heh. Michigan might even be less expensive.
Posted by: P. Aaron | Jan 14, 2011 12:45:05 PM
Yay, let's hear it for Chicago poilitics again!
Posted by: Anonymous | Jan 14, 2011 12:46:19 PM
While small businesses will socked with the higher tax, resulting in more unemployment and less tax revenues, the large, politically well connected companies will threaten to leave, then be granted abatements to keep them in IL. Thus, the politician will get his political donation, the large business will lower their taxes, and the dogmatic Democratic voter gets screwed. This is exactly what happened in past years. IL, you are getting fast and hard exactly what you voted for!
Posted by: pablo panadero | Jan 14, 2011 1:49:23 PM
John Calomoris has the answer. Come on down to Texas. The more productive citizens, the better.
Posted by: KenB | Jan 14, 2011 2:29:10 PM
From the economic point of view, Illinois has an undefensible border. It is more vulnerable than any other state. It has Wisconsin and Indiana at its throat and about a half dozen states in range of its soft underbelly.
It's time to buy some land and set up industrial parks in Kenosha and east of Gary.
Posted by: Michael Cullina | Jan 14, 2011 2:39:23 PM
Hey, there's a lot more to Illinois than just Chicago! Which means it's ALSO jubilation time in Iowa, Missouri and Kentucky.
Posted by: cathyf | Jan 14, 2011 3:30:11 PM
Heck, come to Washington State. We have no income tax and repeatedly beat the Left/Union state government back into submission with initiatives.
Posted by: MikeT | Jan 14, 2011 5:31:26 PM
Sounds like IL is doing its best to follow CA into bankruptcy. Dem governance at its best.
Posted by: richard40 | Jan 14, 2011 6:24:10 PM
John Galt approves
Posted by: Jones | Jan 15, 2011 2:35:46 AM
I hate to 'good mouth' illinois, but even with the tax increase, they are at or below the taxes of their neighbors to the south.
Posted by: Kevin | Jan 15, 2011 5:49:45 AM