Neighboring states gleeful over Illinois tax increase

[The Northerner]

SPRINGFIELD, Ill. – While many states consider boosting their economies with tax cuts, Illinois officials are betting on the opposite tactic: dramatically raising taxes to resolve a budget crisis that threatened to cripple state government.

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 in an interview on Chicago's WLS-AM.

But economic experts scoffed at images of highways packed with moving vans as businesses leave Illinois. Income taxes are just one piece of the puzzle when businesses decide where to locate or expand, they said, and states should be cooperating instead trying to poach jobs from one another.


Read more: http://news.yahoo.com/s/ap/20110113/ap_on_re_us/us_broken_budgets_battling_for_business

[cyberswede]

1. most salient point

"states should be cooperating instead trying to poach jobs from one another."

This is so true - all the wrangling between states to get companies to locate in their state instead of others only benefits the corporations' bottom lines.

[virgogal]

2. But business also benefits the states' bottom line.

[Vincardog]

3. Only when they pay their fare share. I have seen studies where a WallyWorld has cost money and

left after their tax breaks had expired.

[Hello_Kitty]

4. The tax breaks in another state are not usually worth the costs of uprooting

[former9thward]

5. Mayor Daley disagrees with you and I think he is right.

Illinois will lose jobs because of this. http://newsblogs.chicagotribune.com/clout_st/2011/01/daley-says-tax-increase-will-send-businesses-out-of-state.html

[Hello_Kitty]

6. Daley is stating an opinion without research to back it up.

[former9thward]

8. And you know this how?

Just because you don't like the opinion you declare it to be "without research". I'll trust the 'opinion' of a six-term Democratic mayor of the third biggest city in the U.S. over an anonymous internet poster.

[Hello_Kitty]

11. A six term mayor who wants to please wealthy contributors.

I'll trust the opinion of people like these: http://www.itepnet.org/pdf/pb42.pdf

[quaker bill]

24. If your business is large and "desirable"

you can usually tell them this and get a better bid. It is really bad government policy, because the net benefit to the public is less than zero. In some cases the business may only move a couple of miles for a tax incentive, no new jobs are created, the people already working there just have a slightly different commute, but the public coffers are emptied so some politician can claim he/she "brought jobs to the district".

[hfojvt]

7. 67% seems like a monstrous bump though

but I wonder how much it really is. When Kansas did a 1 cent sales tax increase opponents hyped it as a 19% increase!!!

[W_HAMILTON]

12. It's like 2%, lol

From 3% to 5%.

[marmar]

18. Actually, an increase from 3% to 5% would be a 67 percent increase......

..... just for clarity's sake.

[hfojvt]

22. yes it would

but for a household making $50,000 with a $10,000 standard deduction would only pay an extra $800, changing their tax bill from $1200 to $2000. It's not that huge, especially since that person will be getting a $1,000 payroll tax cut this year.

Too bad it is so flat though. It should be .5% at the bottom and 2.5% at the top for the changes.

[W_HAMILTON]

30. No one said otherwise.

Even though now that you bring it up, it certainly does seem quite misleading to describe a 2% increase in such a way, even if it represents a 67% increase. It seems unusual that saying a 2% increase and a 67% increase are both correct. There should have been better clarification.

[fishwax]

13. From 3% to 5%, I believe

[bluestate10]

17. The tax went from 3% to 5%, The rates in Indiana and Wisconsin are over 7%. nt.

[Wabbajack_]

9. Why does IL have a flat tax?

Working and middle class people should not have to pay more.

[ProgressiveProfessor]

10. If other states can provide comparable quality of life without the taxes, what does that say about

Illinois? That really is the key data point.

[fishwax]

14. All of the neighboring states have taxes as well, and most of them still have higher rates

Before the increase, Illinois's flat rate was lower than the flat rate in Indiana and Michigan. Wisconsin, Iowa, Missouri, and Kentucky all have variable rates, and Illinois's rate was well below the top rate in any of those states (and below the bottom rate in Wisconsin). And even after the increase, it's still lower than the upper rates of the variable states. It's higher than Indiana's flat rate, though, and slightly higher than Michigan's.

[ProgressiveProfessor]

15. Then why all the comments that companies will leave?

[bluestate10]

19. Scare tactics. If companies move to neighboring states, they will pay more in taxes

and not have the same quality schools and services. Taxes are just one part of the calculus when companies are siting plants or offices, and become important only if the differences between other factors don't matter..

[fishwax]

21. BS, mostly

[Kurovski]

16. Must be nice that all those states are solvent.

[Ikonoklast]

20. Mitch Daniels doesn't have another turnpike to sell.

He should shut up about responsible tax policy, as he has no more state assets to sell to foreign investors in order to shore up Indiana's budget.

[B Calm]

27. You should hear the truckers on their CB's talking about Mitch selling

the toll road to an Australian company. I really can't understand how that no good bastard was re-elected!

[eridani]

23. Boeing moved it's headquarters from Seattle to Chicago

WA State has no income tax, and sales taxes are higher in Chicago than in King County. I conclude that tax structure ranks very low on the list of reasons for businesses to relocate.

[xchrom]

25. +1 -- though chicago did give them some considerations. nt

[B Calm]

26. We live in Indiana and my wife works in Illinois. It's about time

a state does the right thing and raise taxes, Even though it will take a few dollars from my wife's paycheck, it needed to be done. I think it would have made more sense though to raise the tax on corporations and the rich.

[deminks]

28. You can do bizniz in home state with higher tax, or do bizniz in state with no infrastructure.

Or no snow removal, or no education, or no healthcare. The choice is theirs.

[mucifer]

29. Illinois governors and our state legislators for decade have been putting us

further and further in debt with this "I won't raise taxes" crap. It was a brave move and it had to be done. We are 15 billion in debt. You just can't get services in the state for nothing. That said, $800 is a lot to a family making $50,000.