President Barack Obama is contemplating a slew of government-based solutions to fix the American economy, from higher tax rates and more federal regulations to more stimulus spending. But if he wants to see evidence of where these policies will lead, he need not look any further than his old stomping grounds.
Illinois is in shambles. We may be the only state in worse financial shape than California. We led the country in job losses in July at 24,900, and our unemployment rate is higher than the national average. We rank 47th in the nation in job growth, 48th in economic performance, and dead last in pension funding. We are also the most broke state in the nation. An audit conducted by the Illinois Auditor General and Illinois Comptroller showed Illinois owed $37.9 billion more than the value of all of its assets combined. The report blamed the problem on the failure of state lawmakers to cut spending combined with the recession.
With the state facing a record $13 billion budget deficit earlier this year, Democratic state lawmakers decided to enact the biggest tax hike in state history to help close the gap. State income taxes rose 67%, while corporate tax rates were raised by 45%.
Take note, Mr. President: Illinois has been losing businesses and jobs ever since.
In August alone, two major businesses announced their move across the border to Indiana to escape regulations, high taxes, and an over-controlling state government; both are taking their 250 jobs a piece with them. Modern Drop Forge, which has been in Blue Island, IL since 1914, is now moving its jobs and facilities to Merrillville, IN. Canadian National Railway also announced it will be moving its locomotive repair shop and the jobs that go with it from Homewood, IL to Gary, IN.
And that’s just for starters. Other Illinois-based businesses are openly negotiating with other states about moving their facilities elsewhere. Sears Holdings Corp., based in Hoffman Estates and employing over 6,000 people, has narrowed their moving list to Boston and Washington, D.C. CME Group Inc., owners of the Chicago Board of Trade and Chicago Mercantile Exchange, are considering Wisconsin, Indiana, and New Jersey. And Champaign-based sandwich making business Jimmy John’s is looking to flee to Florida.
Governor Pat Quinn is now finding himself scrambling to put exemptions in place to keep these businesses from leaving the state, which doesn’t really make sense on the policy side. While Springfield hikes the state’s taxes by $7 billion, the governor then tells some businesses not to worry about them? But that’s the case, as Quinn has granted Motorola Mobility Holdings Inc. $100 million in tax breaks over the next decade to encourage them to keep their headquarters in Libertyville, IL and extended Navistar in Lisle, IL $65 million in tax breaks to do the same.
Quinn is doing this to keep up with the job losses the state is experiencing as a result of the tax hike. Illinois was creating more jobs every month as the national economy began to recover. But after the tax hike, the state has been going backwards, losing 89,000 jobs ever since.
If President Obama and the Democrats in Congress enact these same policies on the national level, businesses will have nowhere to flee but overseas. Our already insanely high corporate tax rate of 39.2% is encouraging businesses to outsource their jobs and money to Switzerland, Ireland, and other international tax havens.
These policies are not turning the economy around. They’re only increasing unemployment, putting more people on government assistance, and creating more hardships for American families. The people of Illinois were not impressed, so much so that we gave Obama’s Senate seat to the Republicans last November. The country will do the same with the White House in 2012 if Obama continues down this path.
Photo Credit: Illinois Policy Institute