Editorial: Billions of reasons Illinois is region's odd man out


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Posted Online: April 22, 2014, 11:00 pm
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The Dispatch and The Rock Island Argus
When lame duck lawmakers helped squeak through a whopping 67 percent Illinois income tax hike in 2011, critics warned that the only winners would be moving companies.

Editorial pages including this one also cautioned against believing the promise that part of the increase would be allowed to expire. Lawmakers couldn't resist such cash in 1989 when they made a far smaller increase permanent. Why would they do so now with billions of dollars at stake?

We were hardly prescient on either score. Within hours of the tax hike vote, neighboring Gov. Scott Walker was urging Illinois business to "Escape to Wisconsin." Other states followed suit and the numbers show many accepted their offers.

Meanwhile some lawmakers immediately began to set the stage for what now appears to be an all-but certain extension of the portion of the tax hike set to sunset in January. The inevitability of the campaign led by Gov. Pat Quinn, House Speaker Michael Madigan and Senate President John Cullerton -- the trio of Democrats who run things in Springfield -- doesn't lessen our disappointment.

Nor does it ease our frustration over yet another broken promise from a state that has tinkered around the edges of reform rather than tackle the serious structural problems that plague it. It would be easy to blame it all on a nagging recession and a crippling public pension problem, if it weren't for the leadership demonstrated in such states as Wisconsin, Indiana, Ohio, Michigan and Iowa.

But Illinois public officials are slow learners, even when they have so many excellent examples to guide them. On April 15, the Wall Street Journal published "What's the matter with Illinois?" a comparison of government economic policies and their results in Illinois and the four other Great Lake States that was eye-opening, even for those who have witnessed Illinois' economic meltdown firsthand.

The WSJ's numbers tell the story:

Illinois' 8.7 percent jobless rate is the nation's second highest and it has fallen by just 0.7 percentage points since January 2011, when legislators hiked the personal income tax from 3 percent to 5 percent and the corporate rate from 7.3 percent to 9.5 percent -- fourth highest in the nation and highest in the Great Lakes, according to the Journal.

That jobless rate decline is minuscule compared to Michigan's drop from 11 percent to 7.7 percent, Ohio's decline from 9.1 percent to 6.5 percent, Indiana's fall from 9 percent to 6.1 percent and Wisconsin's 7.7 percent to 6.1 percent drop. What do those states have in common? None of them raised taxes -- Ohio, even cut them. Only Illinois grabbed more. (Also worth noting, WSJ reminds us, Michigan and Indiana passed right-to-work laws and Wisconsin revamped collective bargaining with employee unions.)

Illinois also has the slowest personal income growth in the Great Lakes and a third of that came from money from the feds for entitlement programs which mostly serve those with low or no income. The analysis also said 31,000 Illinoisans left the state's labor force in 2013. That included the loss of 9,000 manufacturing jobs, while Michigan gained 17,000 and Indiana and Ohio each attracted 12,000 of those new well-paying manufacturing positions.

The WSJ piece didn't detail similar Iowa figures, but Quad-Citians can attest to the exodus of companies fleeing to that state's better tax climate. Also added to the high-tax mix here are Illinois sales tax rates, which are 14 percent to 33 percent higher than other Great Lake States, plus the second-highest property taxes in the entire nation.

And yet the march toward making permanent the latest Illinois tax grab continues in Springfield. The Illinois Policy Institute's Scott Reeder reported last week that a top Speaker Madigan deputy expects a vote this spring. State Rep. Frank Mautino, D-Spring Valley, also said it could be coupled with elimination of tax exemptions -- probably those pesky loopholes politicians who don't want to make spending cuts always promote. Rep. Mautino said that legislative money-crunchers are looking at "redoing the whole tax code." That should have everyone quaking, despite promises that majority Democrats will talk with the business community; history doesn't offer much reason to expect they will actually listen.

Added to this toxic tax mix is the speaker's suggestion that Illinois put a surcharge on millionaires. It's been said that Madigan' Millionaire Tax is going nowhere, but as most Illinoisans know by now, in Springfield nothing is ever dead.

Though big and costly incentive packages have become a way of life in Illinois, they have little impact on the vast majority of the job creators. Most businesses don't expect big government handouts. What they crave are fair tax policies and regulations that are predictable and reliable.

Until Illinois leaders create a government that delivers on both, there literally will be billions of reasons the Prairie State continues to be the region's odd man out and the taxpayers who remain will pay the price.















 



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  Today is Thursday, July 31, the 212th day of 2014. There are 153 days left in the year.

1864 -- 150 years ago: A corps of surgeons now occupies the new hospital quarters at the Garrison Hospital on the Rock Island Arsenal. A fence has been installed to enclose the prison hospital.
1889 -- 125 years ago: B. Winter has let a contract to Christ Schreiner for a two story brick building with a double store front on the south side of 3rd Avenue just west of 17th Street. The estimated cost was $4,500.
1914 -- 100 years ago: Germany sent simultaneous ultimatums to Russia and France, demanding that Russia suspend mobilization within 12 hours and demanding that France inform Germany within 18 hours. In the case of war between Germany and Russia, France would remain neutral.
1939 -- 75 years ago: Civil service offices at the post office and the Rock Island Arsenal were swamped as more than 700 youths sought 15 machinist apprenticeships at the Arsenal.
1964 -- 50 years ago: Last night, American Legion Post 246 in Moline figuratively handed over the trousers to a female ex-Marine and petticoat rule began. Olga Swanson, of Moline, was installed as the first woman commander of the post .
1989 -- 25 years ago: The Illinois Quad City Civic Center captured the excitement and interest of a convention of auditorium managers this weekend in Reno, Nev. Bill Adams, civic center authority chairman, said the 10,000-seat arena planned for downtown Moline has caught the eye of construction firms, suppliers, management teams and concession groups.








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