High Taxes In Illinois Pushing Out Businesses, Jobs, and Residents

Four months ago, I wrote a piece highlighting all the problems tax hikes, out-of-control spending, and an unfriendly business environment has brought to Illinois. We were losing more and more jobs every month, owed $37.9 billion more than the value of all of our assets combined, and had the worst funded pension system in the country.

Today, the stats are only worse for Illinois since the record tax hike was enacted.

In addition to pushing jobs and businesses out of state, the Illinois Policy Institute released a report this week showing how high taxes and mandatory union membership participation have also forced over 800,000 residents to migrate out of Illinois over the last 15 years – including to each of its neighbors: Wisconsin, Indiana, Missouri, Kentucky, and Iowa. That average’s to about one Illinois taxpayer leaving every 10 minutes, taking away a total of over $26 billion in taxable income with them.

While Illinois’ neighbors have enjoyed benefits from its woes, the report showed the biggest recipients of Illinois’ mass exodus of residents and money were no income tax, right-to-work states Texas and Florida.

Data from the Bureau of Labor Statistics shows that Illinois was creating more jobs every month as the national economy began to recover. However, since the 67% income tax and 45% corporate tax hikes were enacted in January, the state has led the nation in job losses with over 100,000 now, pushing our unemployment rate to 10.1%.

While businesses like Abbott Laboratories and Jimmy John’s are looking to escape aggressive regulations, high taxes, and an over-controlling state government as well, other businesses like Modern Drop Forge and FatWallet already have and took their jobs with them. Still other businesses like Canadian National Railway moved its locomotive repair shop and 250 jobs from Illinois to Indiana and Peoria-based Caterpillar Inc. has expressed its reluctance to expand or relocate any jobs back home due to the Illinois state government’s “rudderless, dysfunctional business climate.”

There was one development this month that provided for a mixed bag of news for Illinois’ future. After months of threatening to leave the state, take their collective 8,500 jobs with them, and fierce political battles, Sears Holdings Corp. and the Chicago Mercantile Exchange (also owner of the Chicago Board of Trade) were able to get $150 million and $85 million in tax breaks, respectively, over the next 10 years to remain in Illinois. These were similar deals Motorola Mobility Holdings Inc., Navistar, and U.S. Cellular Corp. got from Gov. Pat Quinn earlier this year.

These moves have received criticism from both the left and right. Liberal critics have condemned the tax exemptions and the lost revenue the state will end up losing from them while conservative critics have pointed out how unfair and disproportionate these breaks are for smaller to mid-sized businesses who don’t have the money and resources to lobby for the same exemptions larger corporations are getting. It’s an example of crony capitalism where Illinois Democrat lawmakers are choosing economic winners and losers.

Oh, and where did the subsequent revenue from the tax hikes go you ask?

“The entire 67% income tax hike went to fund the pensions and payroll here in Illinois,” said Adam Andrzejewski, CEO of the 501(c)4 nonprofit group For the Good of Illinois. “There are 3,062 public employees that out-earned Governor Quinn. They’re at all levels of Illinois government. Collectively those 3,000 employees soak up $1 billion in total compensation.” The tax hikes haven’t even come close to closing Illinois’ debt burden, budget deficit, or pension liability.

Add the fact that Illinois is slowly losing businesses, jobs, and residents month after month, and it doesn’t bode well for the future of the Prairie State. The people of Illinois are fed up. The situation’s gotten so desperate that two downstate lawmakers have introduced legislation to divorce Chicago from the state of Illinois, citing the city’s drag on the rest of the state’s economy.

The lawmakers in D.C. could learn a lot from what Illinois is doing wrong. They may also want to check out where the residents, jobs, and businesses are fleeing, like Indiana, Wisconsin, Texas, and Florida, and learn what those states doing right.

Photo Credit: Wikimedia Commons