Thursday, January 13, 2011

Massive Illinois Tax Hike a Bonanza Opportunity for Neighboring States; Governor Quinn In Denial Over Impact to Businesses (UPDATED x2)

I was in an economic development meeting early this past Wednesday, right after the Illinois Senate passed the massive 66% income tax hike. The mood in the room? Bleak, at best. Being a "border" county, we in Lake are more likely than many to feel the impact as business flee across the border to Wisconsin, helped along by our friends to the north as they seek to capitalize on our woes -- and, frankly, who can blame them?

Wisconsin's new Republican Governor Scott Walker can barely contain himself, as he touts his new "Escape to Wisconsin" branding effort (and we're not talking about spending the weekend in Door County, folks):

Wisconsin is open for business. In these challenging economic times while Illinois is raising taxes, we are lowering them. On my first day in office I called a special session of the legislature, not in order to raise taxes, but to open Wisconsin for business. Already the legislature is taking up bills to provide tax relief to small businesses, to create a job-friendly legal environment, to lessen the regulations that stifle growth and to expand tax credits for companies that relocate here and grow here. Years ago Wisconsin had a tourism advertising campaign targeted to Illinois with the motto, ‘Escape to Wisconsin.’ Today we renew that call to Illinois businesses, ‘Escape to Wisconsin.’ You are welcome here. Our talented workforce stands ready to help you grow and prosper.”

Indiana's governor Mitch Daniels has been salivating for weeks, and even has compared bordering Illinois to living next door to Homer Simpson.

Heck, even Missouri and Kentucky are getting into the act.

Maybe the saddest part of all of this is that Governor Quinn seems to be in denial about the impact this is going to have. The fact is, the business owners and wealthiest people in the state are the most mobile, and have the greatest flexibility to shift income around. I've spoken to many people in the last few days that have friends who already spend a lot of time in Florida or Michigan -- especially for small business owners, it only takes a little bit of a change to make your state of residency somewhere other than Illinois. In this day and age, since so many business are no longer "bricks and mortar" operations anyway, what's the difference in where your company is located if you are simply renting office or warehouse space? Sheesh, your workers might welcome a move to a neighboring state, as it might be financially beneficial for them as well.

So, I am very skeptical that the tax hike may even raise as much revenue as the state General Assembly predicts, much less the notion that this will not have a devastating impact on the Illinois economy.

About the only good thing you can say about the tax hike is that at least it's over, and the people in this state whose job it is to increase economic development and opportunity in this state can at least say that it may suck to be here, but at least now we know how much it sucks. Seriously, I think many businesses have not forgotten about the Gross Receipts Tax (GRT) debacle that scared the beejeebers out of anyone even thinking about locating or expanding in Illinois. What businesses hate worst is uncertainty, because they cannot plan. Folks in government who treat the taxpayers like an ATM machine and are not forced to live within their means, or go out of business, just don't get that.

In Illinois, maybe they never will.

UPDATED 9:55 a.m.: Rich Miller at Capitol Fax Blog and I are thinking alike this morning. See his wrap-up of similar stories here.

UPDATED 4:10 p.m.: Although the Tribune pointed this issue out even before the tax vote (and we discussed it in detail here), more people are now keying into the fact that even this tax hike isn't going to fix a problem that will loom in four years or so, without addressing out of control spending.

27 comments:

Anonymous said...

===it only takes a little bit of a change to make your state of residency somewhere other than Illinois.===

Unless you really do leave, that's not true. There are some pretty strict rules.

Rob_N said...

Wisconsin, Indiana, etc. all have HIGHER personal and/or corporate taxes.

This is nothing but conservative whining and hot air.

Again - Illinois Republicans didn't vote for the tax increase but were all too happy to literally vote to begin spending the new revenue immediately thereafter.

Anonymous said...

Rob N - at least TRY to get your facts straight. Indiana's personal income tax is a flat 3.4%. In what world is the Illinois 5% less than the Indiana 3.4%. Silly me - in the world of Illinois Democrats!

edsullivanjr said...

Rob_N,

The new corporate rate has been raised to 7% but that does not include the personal property replacement portion of the tax of 2.5% bringing the total tax to 9.5%. So the reality is the State of Illinois will move to the 3rd highest employer tax in the nation behind Minnesota and Pennsylvania.

I am not sure what your comment meant regarding Republicans “were all too happy to literally vote to begin spending the new revenue immediately thereafter.” There was one vote in the lame duck session on a supplemental appropriation and I am fairly certain all Republicans voted against this increased spending.

Rep. Ed Sullivan

A. Bees said...

ROb N -

The total tax outlay in the state of Illinois dwarfs that of neighboring states. Why do you think so many are moving elsewhere. Simple example... Uline's new digs in Pleasant Prairie. You can also look at the fact that Abbott has bought significant amounts of property in Kenosha County in the last few years.

You can point to individual taxes all you want, but the bottom line is the total amount of taxes and that is where Illinois continues to follow the Democrats irresponsible tax and spend priorities.

Anonymous said...

Team America ect,

our side in Illinois reminds me of the gore-kerry democrats of pre 2006 era where they would go into every election and say of course the people will see what clowns and evil doers the other side is and then vote for us. You'll remember those as the halcyon days of the Grand Old Party as the democrats failed to do then what we are failing to do now which is to excel at the nuts and bolts of politics, having facts on your side is not enough and often not even the factor that matters most. What matters most is what we seem to do worst which is to actually win elections and do the fundamentals of politics right in terms of finding arguyments to win over those that disagree with us and find ways to further motivate our side to action. For all the mark love and I am on that bandwagon, he got under 50 percent against alexi.

What I fear most is that we'll do again in 2 years what we've largely done for 12 years here which is to say, facts are on our side, ignore the hard work necessary and then with obama on his final ticket (glad he's out of here) get whupped as the tax increase becomes permanent.

ask carl nyberg, good facts alone don't make good election results.

FOKLAES

Rob_N said...

I must've hit a nerve.

Did anyone who thinks they were knocking down my points bother to click through to the Rich Miller post that Larry hotlinked in his first update above?

I'm not sure Larry realized what it said because Rich wrote throughout his own post that our neighbors have higher total tax rates and essentially revealed all the neighboring Republican governors' hot air for what it was - hot air.

--

Anon 7:01 - Look at Indiana's corporate rates, etc. One of their taxes may be a bit lower than ours but look at the whole picture you're conveniently ignoring.

--

Rep. Sullivan - As Rich Miller pointed out, yes Illinois' new corporate rate + property tax replacement does put us higher than Wisconsin on a rate to rate perspective -- but Wisconsin charges a state property tax which not even property tax-happy Illinois does.

As Senate President Cullerton recently suggested, if you'd like to lower the corporate tax rate then by all means please suggest which corporate loophole giveaways you'd like to abolish.

Personally, I don't need to see my state forking over special favors so newspapers can buy ... paper. Let the free market decide that.

Got any other ideas for corporate special favors we can eliminate so as to reduce their tax responsibility, Mr. Representative?
Or, perhaps like me, you'd prefer to see a progressive tax structure implemented by changing our state's Constitution so as to make our taxing responsibilities more fair for all Illinoisans.

(I've always found it fascinating that conservatives complain about wanting a flat tax to no end ... until they actually live with one and then they complain about a flat tax too. Don't you?)

edsullivanjr said...

Rob_N,

The new tax structure is what it is. It will be with us until there is a change of leadership at the state level. My curiousity with your post revolved around your commenting that Republicans were happy to spend this new found fortune. As I said there was only one vote that had anything to do with GRF funds. The supplemental appropriation bill was voted on by all Democrats. I do not think any Republicans voted for it.

Rep. Ed Sullivan

Anonymous said...

When Uline moved their corporate headquarters to Wisconsin, the Illinois' income and corporate tax was lower than Wisconsin's. Their move was predicated upon the oppressive burden of Lake County's property tax. They actively sought properties in Antioch, Zion and Lake Villa. Pleasant Prairie offered a property tax holiday to them if they agreed to pay an upfront impact fee. No Illinois community was willing to match that offer and so they moved. You should also be aware that the "deal" Pleasant Prairie entered into was before the economic downturn of 2008 and is no longer a very good deal. Moreover, the NCSL rates Wisconsin and Indiana high on the list of states that need to consider a tax increase to sustain basic governmental functions and their bond ratings by 2012.

Bees, your "simple" example is simply incorrect. In fact, look to the Republican controlled County Board, municipal and township governments for the 'tax and spend' barrier to business development. Is it any coincidence that the Fedex facility Suzi Schmidt claimed was all her own doing, happens to be in Avon Township, the only township around here lowering its levy.

Both sides of the aisle in Springfield have contributed to this mess. Worse still, partisan blathering like yours allowed it to happen.

Rob_N said...

PS - Anon 1/14/11 7:01....

I missed a stat that Rich Miller posted the other day.

Yes, Illinois' income rate is now 5% (was 3%).

Indiana's state income rate is 3.4%.

It was higher but is now lower.

However, in Illinois counties are not allowed to charge income tax.

In Indiana counties are allowed to charge up to 3% on top of the state rate.

That puts many Indiana counties at 6.4% income tax rate... and Illinois is still lower.

Cherrypick all you want my friend - your claims are still sour.

Anonymous said...

Rep Sullivan,

S-GOPs helped vote for the pension bond 5 minutes after the tax increase went through.

Did you go to bed too early? :)

(Just a joke.)

edsullivanjr said...

Anon 2:59

I actually was in bed before all the drama took place in the Senate! While I disagree with the Repub Senators voting for increased borrowing at least it was not for increased spending. They were borrowing for existing obligations. The House, except for two retiring Repubs, did not vote for the borrowing last May.

Sen. Brady was criticized for wanting to cut 10% of the budget. The 10% he spoke of would have gone a long way towards that pension payment we statutorily needed to make.

Rep. Ed Sullivan

Rob_N said...

Wow. A sitting legislator thinks "borrowing" isn't "spending." Explains a lot.

Does the "borrowed" money never have to be paid back, Rep. Sullivan?

Because unless Wall Street suddenly becomes very generous and allows the state to not pay that debt back money will be "spent" to pay for the "borrowing" when the bonds come due.

(And "Anon 2:59" was me. Not sure what happened there.)

edsullivanjr said...

Rob_N,

While I do not know who you are as you hide in anonymity, you clearly have a line on what is happening in Springfield. So please give up the sarcastic posts.

As you know, the $3.7 billion was for state mandated pension payments that the Democrats choose not to pay out of GRF. I was critical of a few Senate Repubs for their vote to borrow to pay the pensions. You are correct, the reason those that voted for the borrowing gave was that there was a new revenue stream to pay for the borrowing. There was a second vote to borrow and additional $8.5 billion in the House that never got to the Senate because all House Repubs held strong. This was to pay for all the increased spending that got us into this mess with a backlog of bills.

I do not have a problem with you calling out a few Senate Repubs on this issue. I do have a problem you calling out all Repubs when you clearly know you are wrong.

Rep. Ed Sullivan

Team America said...

Ed - Rob_N is not really very anonymous -- if you really want to get to know him, you can check out his blog at

www.illinoisreason.wordpress.com

Rob does seem to be annoyed by those that blog under a nom de plume like I do, even though my name is plastered all over the Daily Herald, and hasn't been a secret for a long time.

It's mostly that being Team America is a lot more fun than being Larry Falbe, at least on the blog. ;-)

Anyway, you're certainly welcome to carry on your discussion with Rob here, but you might consider carrying the battle to him on his blog, as Lou Atsaves did some time ago.

edsullivanjr said...

TA:

I clicked on his/her name and saw where he/she comes from. Just does not say who he/she is. Doesn't really matter and I do not have the time to try to find out. I just dislike when people that clearly have inside knowledge blatantly lie about things to try to prove an argument.

Go Bears!

Rep. Ed Sullivan

Rob_N said...

Larry,

I call you Larry (or, occasionally, Mr. Falbe) out of courtesy. It's your name.

As you well know, while you chose to remain anonymous I protected that for you as best I could at my own blog.

You chose to reveal yourself and so it clearly was no longer an issue.

--

Rep. Sullivan,

I should hope you have more of an inside track than I since all I know is what I read from Rich Miller, Mike Riopell, and other journalists covering Springfield.

As Larry indicated, I'm not all that anonymous though even when using my full name I've been similarly accused by other conservatives.

And I didn't ever say "all" Republicans voted to spend the newly raised revenues. I simply said "Republicans" because there more than one member of your party voted "Yes" for the borrowing/spending.

You seem to have an issue with me publicizing this fact, going so far as to now call it a lie.

In the process you (like another conservative who frequents this site) accuse me of being a liar without offering any evidence other than that you appear to dislike my recitation of basic facts.

You may dislike the fact that neighboring states have higher income and/or corporate taxes.

You may dislike the fact that Republicans voted to spend (ie, borrow) more money immediately after Illinois' taxes were raised.

You may dislike that I noted these facts or even my opinion of these facts.

But none of that makes them lies.

I find it curious that you would so quickly accuse me of such.

Rob_N said...

PS - We do at least agree on the Monsters of the Midway!

Bring on the Pack.

Anonymous said...

RobN's name calling is a sign of respect? Like "Republican Clown College" over on his website? Or unfounded claims that Republicans don't like to pay any any taxes?

Making up stuff is not advancing political discourse.

If anyone doesn't believe me they can go to his blog and see for themselves.

Did your lame duck friend Walker campaign on increasing taxes immediately after the election? From your postings over there, the answer seems to be "no" but I will await any further information you can provide.

Louis G. Atsaves

edsullivanjr said...

Rob_N,

When dealing with the law in Springfield we always fall back to what is the intent. While you did not say ALL Republicans your intent was to label all Republicans. Did you lie to further your argument? How about this, in the spirit of compromise I will withdraw my point and say you “conveniently overlooked or misspoke regarding the facts”.

What the heck, the Bears won and we get to kick the hell out of some CheeseHeads this weekend on the football field.

Rep. Ed Sullivan

Rob_N said...

Louis,

Yes, calling someone by their first name or, more formally, their last name usually is a sign of respect.

Or do you disagree?

As for any actual "name-calling" ... disrespect is as disrespect does. If we each had a nickel for every time someone posted "pup", "catlady" etc. on this site we'd all be rich. I also recall you referring to me as a court jester for a time. ;)

Listen - if you can't take a little good-natured ribbing every now and then why are you in the heat of the kitchen?

And, no, Rep. Walker did not campaign on raising taxes though he did say (as all smart legislators do) that he was open to compromise and further discussion based on the facts as they became known.

And the fact is that once you slice through all the partisan rhetoric the nonpartisan bankers of Wall Street weren't going to do diddly-squat regarding decent interest rates unless and until the state raised revenues, ie, taxes. Knowing what I know of Rep. Walker he likely had that in the front of his mind as he made the vote.

As I've made readers fully aware Mark is a friend of mine. I have seen him since the end of session but we talked more about Girl Scout cookies and the upcoming April local elections than about Springfield so I don't know specifically what convinced him to change his mind.

I'm sure you could ask him yourself though if you're truly interested and just tossing partisan hash.

Rob_N said...

Rep. Sullivan,

I'm not trying to be facetious but are you a mind reader, sir? Clearly you weren't understanding my intent from my first comment to now.

My intent all along has been to highlight that Republicans supported spending the revenues raised via raising the tax rates. As you pointed out, some Republicans in the House voted to do so before the revenues were raised while other Republicans in the Senate did so after the taxes were raised -- literally 5 minutes after.

My intent was to acknowledge this fact since it had not yet been mentioned on this thread pooh-poohing the tax issue. (Perhaps it was "overlooked" by your fellow Republicans here.)

Nothing more, nothing less.

And noting this fact is neither an omission ("overlook") nor a misstatement ("mispoke").

Look, no one enjoys paying for taxes. Heck, if we could all get free groceries I'm sure people would be head over heels for that too. But the fact is we all need to pay for the things and services we use -- from groceries to kids playing T-ball to fixing potholes to guarding prisoners to attracting new business to the Prairie State.

And I realize I'm never going to convince you that a 10% cut simply wasn't going to cover the systemic expenses accumulated over the past few decades (not that we shouldn't try to cut as much as we reasonably can) which means that, as Wall Street continuously urged, we needed to dramatically increase our state's revenues.

The 50 states cannot declare bankruptcy for one simple reason -- they can increase fees and taxes to raise revenue.

That is what happened.

And my intent was to point out that all the Republicans' hot air about taxes in neighboring states -- both intra-state and inter-state -- was ignoring the basic fact that the grass (or taxing structures) ain't really greener on the other side.

In fact, on several levels taxes are worse/higher amongst our neighboring states.

For better or worse, we'll now be able to compare how Wisconsin, Indiana and Illinois fare during the next few years. Should be interesting.

Have fun watching the game this Sunday and drive safe out there.

Anonymous said...

"Good natured ribbing?"

Let me know when you try to practice it. In between counting all those phantom busses you keep claiming exist.

Louis G. atsaves

Rob_N said...

Louis,

Someone such as yourself who consistently refuses to acknowledge that the Americans for Prosperity "November is Coming" National Bus Tour was, in fact, a bus tour ought to be able to tolerate a little good-natured ribbing every now and then.

Again -- go ahead and zoom into Northbrook, IL on AfP's map of Bus Tour Events and you'll still see the "phantom" Bus Tour Event listed for September 17th, 2010 even though you keep saying it doesn't exist:
http://novemberiscoming.com/beta/?portfolio_item=bus-tour-events

Now, good-natured ribbing (at least in my view) is all well and good. You would seem to agree since you played along all during the 2010 election season, calling me names and the like.

All I'm doing is poking some fun since you continue to claim a bus tour which so clearly did exist is somehow a "phantom".

It's not my fault you can't admit when you're blatantly wrong. (And again just because you didn't see a bus doesn't mean Grove Norquist didn't call his roadshow a "bus tour" as he so obviously did.)

Anonymous said...

You claimed everyone was bussed in and that Dold spoke to the entire gathering. In the meantime Dan Seals took the day off campaigning because it was a major Jewish Holiday and insinuated that uncaring boorish types would campaign on such a day. You lied about Dold speaking to the group and when you discovered there were no busses you went back to a few earlier ads rather than admit you were wrong.

And all that time through all that heated debate you were just being a jokester?

Like smarmy Ricky Gervais at the Golden Globes awards?

And you wonder why you get no respect?

I didn't go to your website to harass you. No one has enough time in their day to do that. I would read your stuff because you sometimes write interesting stuff. Too bad as the election drew near you switched from Jekel to Hyde and made a fool of yourself at times during the transformation.

Once blown, credibility is hard to recover. You have a long way to go Mr. Bus Man!

Anonymous said...

Sorry, Anon 9:18 is me.

Louis G. Atsaves

Rob_N said...

Louis,

I get plenty of respect from rational folks. It's the folks who think highly-publicized national bus tours don't exist that seem to have a problem with me repeating simple truths. Actually, not "folks" per se. Really more just you, Mr. Atsaves.

Now, faced with the facts yet again, you're resorting to putting words in my mouth.

I've suggested several times that you should use actual quotes or at least provide specific links to try and prove that of which you accuse me...

You've failed to do so yet again during yet another of your unfounded tirades. It's understandable given that you keep claiming Grover Norquist's well-publicized national bus tour was a "phantom".

That reflects poorly on you, kind sir. Not I.

Such is life.

PS - I recall our host Mr. Falbe repeated an actual false claim about candidate Dan Seals' supporters being bussed in to a parade. When I called him out on his false accusation he offered no proof other than a rumor he'd heard from a fellow at that parade.

The Seals Campaign of course did not bus anyone in.

It was Mr. Dold using a bus during his campaign, much like Mr. Grover Norquist and his own nationwide bus tour which included that infamous and controversial bus tour stop in Northbrook on Yom Kippur.

PPS - Reading the Seals camp's press release on the topic, even these many months later, they clearly weren't taking issue with the notion of campaigning in general on Yom Kippur.

Rather, their beef was very specifically that Mr. Dold was campaigning on the Jewish Holy Day of Atonement with an extreme right-wing idealogue, Grover Norquist, who has repeatedly said he wants to drown our nation's government down a bathtub drain.

Oddly but by that point not unexpectedly, the Daily Herald reporter who covered the Seals-Dold campaign had the same bizarre interpretation of the Seals campaign's straightforward press release as you, a highly-partisan Republican committeeman.

Then again, that reporter often simply repeated the Republicans' spin without question (much like yourself) and was routinely called out for his lackadaisical stenography by another Illinois political journalist, Rich Miller, who tends to call BS when he sees it from both right and left.