The map below shows in stark contrast that other than the most prosperous areas in downtown Chicago and the North Shore, Illinoisans are struggling to make ends meet. With so little prosperity, middle class families in the red regions would be hurt the worst by any new utopian tax scheme, such as the progressive income tax.
While the headlines occasionally flare with the latest fight over some large corporation locating in the Chicago area, the rest of Illinois is left to compete with surrounding states for what little business they can attract. If you were the head of a large corporation or manufacturer looking for a new location to set up your business, would you even consider coming to a state with only a thousand square miles of prosperity surrounding Chicago? FoxConn didn’t, and I suspect Amazon won’t either.
Some specific legislation I have introduced to address Illinois’ uncompetitive workers comp and job creation environment are HB4071WORKERS’ COMP-RATE CHANGES; HB3319 RIGHT TO EARN A LIVING ACT; HB4063 ATTY FEES WORKER COMP 15% MAX; and HB4071 WORKERS’ COMP-RATE CHANGES. Also, I was the only member of House to introduce a balanced budget that fully funded education and vital services without hiking taxes or spending.
Regarding the basis for the ranges, I selected a few reference points that I believe are significant. While the data per zip code utilized for the creation of the map overlaid with the House Districts is based upon Adjusted Gross Income (AGI) which is defined by the IRS as “gross income minus adjustments to income,” two of the significant thresholds are based upon income alone–$24,036 for the US Poverty Threshold and $59,558 for the median income in Illinois, both for 2015. Therefore red highlights areas that struggle the most with making ends meet, with the green representing more improved circumstances, and finally the blue for those in the top 25%, where the greatest prosperity exists.
We must change our economic and regulatory environment in Illinois to bring prosperity back to more than just the 50 miles that surround Chicago. Under the 30 year rule of the Democratic Majority, the following economic facts and figures clearly demonstrate that we are failing miserably:
Economy Facts and Figures
- Illinois lost a record $4.75 billion in adjusted gross income to other states in the 2015 tax year, according to IRS data. That’s up from $3.4 billion in the prior year.
- Many of the migrants were retirees who often flock to warmer climates. But millennials accounted for more than a third of the net outflow in tax returns.
- While Florida, with zero income taxes, was the top destination for Illinois expatriates, Illinois lost income and people on net to all of its neighbors—Wisconsin (6,000 people based on claimed exemptions), Indiana (8,200), Iowa (1,900), Missouri (2,000) and Kentucky (1,100).
- Property taxes in Cook County and Chicago’s “collar” counties are the highest in the country outside of California and the Northeast.
- The average homeowner who moves from Lake County, Illinois, across the border to Kenosha County, Wisconsin would receive a $3,200 annual property tax cut.
- Taxes may increase as the Democratic Majority scrounges for cash to pay for pensions. Fitch Ratings reported that Illinois’ unfunded pension liabilities equaled 22.8% of residents’ personal income last year, compared to a median of 3.1% across all states and 1% in Florida.
- Illinois’ economy has been stagnant, growing a meager 0.9% on an inflation-adjusted annual basis since 2012—the slowest in the Great Lakes and half as fast as the U.S. overall.
- This year nearly 100,000 individuals left the Illinois labor force.
- The University of Illinois Flash Economic Index, which measures corporate earnings and investment as well as personal income, hit a five-year low in October, 2017.
- Illinois is one of the few states (16 total and the only among bordering states) with a corporate franchise tax. The corporate franchise tax is calculated through a very complicated process in which most would-be franchisers need assistance from an attorney or accountant familiar with the formula, adding even more cost and burden. A simple solution to the problem would be a full repeal of the antiquated tax and to tax based solely on the corporate income tax rate.
- According to the Pacific Research Institute’s 50-State Small Business Index, Illinois ranks:
- 44th in Workers’ Compensation costs (highest among neighboring states, Missouri next closest at 30th and Wisconsin at 28th)
- 39th in Unemployment Insurance costs (highest among neighboring states, Wisconsin ranks 38th and Iowa at 23rd)
- 39th for State Minimum Wage at $8.25/hr (highest among neighboring states, Missouri ranks 25th with a minimum wage rate of $7.70/hr)
- Tied for 32nd with five other states, including Iowa, for additional Family Leave Mandates (Indiana ranks 25th)
- 30th for Occupational Licensing burden (Kentucky ranks 49th, Iowa 33rd, Indiana 19th, Wisconsin 12th, and Missouri 6th)
- 41st in Labor Regulation burden (highest among neighboring states, Kentucky is the closest at 29th)
- 46th in Tort Liability (highest among neighboring states, Kentucky is next at 38th)
- 45th in Start Up Costs (highest among neighboring states, Missouri ranks 29th)
- 38th OVERALL in comparison to all other states assessed burden (highest among neighboring states, Kentucky ranks 25th, Iowa 23rd, Wisconsin 21st, Missouri 10th, and Indiana 1st)
- Illinois requires 93 different occupational licenses, equating to nearly 25% of its work-force being licensed. Several organizations representing employers and employees have expressed a desire for a reduction of licensure needs through extensive and comprehensive examination.
- In July 2017, Illinois increased the individual income tax rate by 32% to 4.95%.
- Illinois’ many units of local government (highest in the U.S. with over 7,000) can lead to conflicting local ordinances for businesses (facade, zoning, siting, etc.), even among neighboring municipalities. By creating uniform caps on ordinances at the State level, groups that represent small business contend that prospective business owners would have an easier time creating business plans that can include expansion across municipalities without an excessive burden.
- Illinois requires a store closing license (815 ILCS 350) for a business to conduct a store closing sale. Originally intended to prevent perpetual and fraudulent “going out of business” sales, many other states have repealed similar legislation that was preventing businesses from unloading the remainder of their merchandise, which cost the business owner a loss in revenue, as well as, a loss to the State in sales tax revenue. Simply repealing this license would be a step in the right direction.
- Illinois’ tax code for retail businesses is overly complicated, convoluted, and lacks uniformity. A simplification of retail taxes, like the shipping tax (not uniform among all products) and medicine/drug tax (tied to promotional language on the package and can vary between similar items), would go a long way in easing the burden on small business owners.