I don’t know if you saw this with all the news yesterday. Illinois lost 89,000 jobs since enacting the largest tax increase in the history of the state, as reported by the Illinois Policy Institute.
It was the largest job loss of any state in the nation.
Democrats will blame it on a poor economy. The truth is, higher taxes change behavior. Combine that with the fact that Illinois pols have given tax waivers to some large companies. John Deere ($JD), Motorola Mobility ($MOT, $GOOG), Sears, and others have gotten roll backs on the tax. So, like most tax levies it falls on small businesses and medium size companies.
Motorola Mobility promised to hire people for the tax rollback. Now that they have been purchased by Google, that promise goes out the window. Say goodbye to those jobs.
There is no doubt, other companies are exploring a move from Illinois. Recall that the Democratically controlled Illinois legislature didn’t just raise the corporate income tax, but they killed internet businesses too.
One major company, $CME, that actually has to pay it’s taxes said on the latest earnings call that they have had discussions with other states. I wouldn’t blame CME one bit for leaving. They can increase their earnings 9% simply by moving. I am one shareholder that endorses the move.
But, it’s not only taxes that are killing business and jobs in Illinois. It’s also regulation. Illinois is one of the most regulated states in the US. Recently, Mayor Rahm Emanuel, Obama's fromer chief of staff, and the Chicago City Council passed a regulation designed to get banks to pay more on foreclosures. The net effect of the new ordinance will be to increase the costs of loans to Chicagoans, and decrease the availability of credit to them.
What a great way to solve a housing crisis!
There has been a big “love in” all over Chicago with regard to Mayor Emanuel’s first 100 days. The reality is, there has been a lot of talk and no action. Taxes haven’t been decreased. Pension costs haven’t been trimmed.
New Jersey Governor Christie did more in his first week than Emanuel has. But, if you were expecting change under Mayor Emanuel, you were clearly mistaken. It’s more of a re-arranging of deck chairs on the Titanic.
I don’t doubt that the Democratic politicians love their state and city any less than anyone else. It’s just they have a funny way of demonstrating that love. Higher taxes and more regulation that increase costs to the citizens is more like abuse.
In economics, we call that limiting freedom.