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Behind the tax hike hype

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Illinois

* I’ve said this before and I’ll say it again, most of the bluster from surrounding state governors since Illinois raised its income tax is just that. Bluster.

Their trash talk is mostly about domestic politics. Before Wisconsin Gov. Scott Walker was even sworn in he had turned down hundreds of millions in federal transportation aid and, as a consequence, lost a rail car manufacturer. For that, he was whacked hard by Gov. Pat Quinn, who vowed to recruit the manufacturer. Since bashing Illinois is a favorite pastime up in CheeseHeadLand, Walker is taking full advantage to help restore his reputation. Payback time.

But Wisconsin is also losing businesses to Chicago…

Jim Rozell owns a hotel analytics company and plans to relocate from Glendale, Wisc., to Chicago by the end of the year. Hotel Compete currently has five employees, but Rozell said he will likely hire 10 more people once he comes to Illinois.

Rozell said he started planning the move before taxes went up Illinois, but hearing about it didn’t deter him.

“Initially one of my big deciding factors was that taxes were much lower (in Illinois). Even with your tax increase, it’s still lower than Wisconsin,” Rozell said.

Who would want to headquarter their company in the super boonies when they could put it where the real money is in Chicago?

* The same basic political formula is playing out in Indiana. Hoosier Gov. Mitch Daniels believes he’s running for president. For whatever reason, anything bad that happens in Illinois or Chicago is automatically seen by the Right as reflecting poorly on President Obama, even though he’s not responsible for 99.9 percent of it. It’s just another silly national politics game, and Daniels is quite understandably using it to his full advantage. And, of course, the Hoosiers hate us as much or more as the Cheeseheads. So, he’s also playing to the home fans.

* Will we lose businesses to Wisconsin and Indiana in the coming months? I’m sure we will, and they’ll make a big huge deal out of it. But not everyone who threatens to leave will do so…

Troy Freeman, owner of design and marketing firm Dig-It-All Designs, said the possibility of leaving the state has “absolutely” crossed his mind.

“The tax (increase) hasn’t really hit us yet. We’re looking to see what the impact is,” Freeman said. “The tax thing isn’t as big an issue so much as the work climate.”

While he hasn’t made any serious movements toward relocation, Freeman said when he does business with out-of-state clients, he always asks them about the atmosphere in their states.

Dig-It-All Designs relies mostly on central Illinois clients. If they leave, they will be abandoning their client base. Don’t bet on it happening soon.

* Missouri is also getting into the act…

The Missouri Chamber of Commerce and Industry’s website bluntly declares: “(We’re) looking at ways to position Missouri to take advantage of our neighboring state’s economic misfortune.”

But two can play at that game…

Scrap metal recycler Becker Iron & Metal Inc. plans to move its headquarters from St. Louis to Venice, Ill.

The company’s move will help create at least 42 permanent Illinois jobs and support another 198 construction jobs as part of an overall $4 million investment in Madison County, Illinois Gov. Pat Quinn said Friday.

* Meanwhile, the Chicago Tribune headlined its post tax hike editorial “Goodbye Jobs,” but it supports what some say is a job-killing Amazon tax…

Amazon has vowed to fight these measures, in part by cutting off its affiliates, which collect a share of the sales they send to the retailer. At least one, CouponCabin.com, has threatened to leave Illinois if Quinn signs the bill.

Quinn should sign anyway. That will encourage California and other states on the fence to follow through with similar legislation, which in turn will force online retailers to reconsider their scorched-earth threats. Pressure will mount for the federal solution we need.

No one here relishes the idea of a new business tax. On the surface, it sends the wrong message, especially from a state legislature with such a horrendous record of thwarting job creation.

But many Illinois businesses, including the Illinois Retail Merchants Association, want this law for simple fairness. They’re right. Amazon and its kin rack up hundreds of millions in sales from Illinois residents. Why should e-tailers get a price advantage over competing stores that are compelled by law to collect sales tax?

* Related…

* Plan would charge state retirees more for health care: The retirees are responsible for co-payments, even if nine out of 10 of them don’t pay premiums. The state’s costs rose more than 10 percent to hit $488.2 million in the last budget year, and that doesn’t even include dental and vision expenses. Some of the increase is attributed to workers who have left Illinois for warmer climates. The cost for their care can be higher because they can’t always get the group rate discounts of a managed-care plan when they move to another state.

* Worker’s compensation reform could delay borrowing

* State Bankruptcy Is a Bad Idea - Politicians already have the power to tame public unions without roiling municipal bond markets. They merely have to use it.

* Spending cap will ‘strangle’ state services

* Seeking permission to pollute - Dust has yet to settle on plan to build coal-to-gas plant on Southeast Side

* Former Governor Jim Edgar Weighs In On Income Tax Increase: Former Republican Governor Jim Edgar believes the recent income tax hike is a step in the right direction towards wiping out a 13-billion-dollar deficit.

* State corporate income tax hike to take uneven toll - Firms that make most of their money in Illinois will feel biggest hit

* Lawmakers question state inaction on construction proposals

* Editorial: The Davis file

posted by Rich Miller
Monday, Jan 24, 11 @ 10:22 am

Comments

Hoosiers clearly hate Illinoisans, judging by the condition of the Indiana Toll Road link to the Skyway.

For years now, it’s been a post-apocalyptic nightmare that would strike fear into Mad Max, nothing but concrete barriers, orange barrels and single, curvy lanes.

They have a lot of nerve charging anyone anything to drive on the deathtrap. I drove it Saturday night coming back from Michigan and it was like an unfinished East German luge chute.

Do they ever complete any projects in that state? The Borman Expressway is chronically under construction, but you never see anyone working.

I base that as well on the quite fragrant conditions in the Indiana Rest Stop and Tourism Center (whatever that means) on I-94.

Comment by wordslinger Monday, Jan 24, 11 @ 10:40 am
I’m not picking on Troy (I’ve used his services), but not only would he be moving away from his client base, he would lose all the reciprocal relationships he has with other local designers. Most small businesses are the same.

They’re always digging it up in chunks somewhere else.

Comment by Way Way Down Here Monday, Jan 24, 11 @ 11:03 am
I’ve been saying for some time that the state should require employees to pay something for early retiree health insurance, especially since many early retirees retire into new employment. Early retirement for government employees is a choice—-even in this 21st century, government jobs are lifetime jobs if the incumbent so chooses. In fact, once health reform is implemented in 2014, why give early retirees health insurance at all. Or charge them the market price offered by state pools. Our legislators have been absolute laggards about this low-hanging budget fruit.

Comment by cassandra Monday, Jan 24, 11 @ 11:14 am
===Who would want to headquarter their company in the super boonies when they could put it where the real money is in Chicago?===
Answer: Rich Miller

Comment by Been There Monday, Jan 24, 11 @ 11:27 am
What happened to the “United” in these United States. Is that now made in China too?

Comment by Ipso Monday, Jan 24, 11 @ 11:28 am
===Answer: Rich Miller ===

lol. I’m headquartered in my market center.

Comment by Rich Miller Monday, Jan 24, 11 @ 11:33 am
I’m not sure the lack of sales tax is that big of a determiner for why local retailers lose out on business to e-tailers. Usually, when one orders something online, one pays shipping. That shipping price is usually about the same as sales tax, unless is one is buying a very small, light, expensive object.

There are free-shipping deals, but really, nothing in business is free. To offer that “free” shipping, the etailers either has to increase the price of the object or leverage the loss to gather good will, brand loyalty, or harvest additional email addresses.

I buy a lot of stuff online. It’s not about the sales tax it’s about availability. Even in Chicagoland it can be hard to find an eeprom programmer, or the exact Android tablet one might want, or an extra battery for an mp3 player…

And then there’s book where the local retailers have largely decided to just stock current titles of popular authors.

Comment by cermak_rd Monday, Jan 24, 11 @ 11:38 am
Due to the tax increases, Jimmy Johns is moving to Florida. That would be a loss of over a hundred jobs. The owner, Jimmy himself, has made it crystal clear that he is POed and cancelled expansion plans in Champaign. The CEO is also angry over the tax increases and is supporting the move.

The publicity is not good. Even if this is all, JJ is making ugly news for Illinois.

Comment by VanillaMan Monday, Jan 24, 11 @ 11:48 am
Hoosiers clearly hate Illinois?

Um, wow. Sure. You must have heard that at a rally bonfire with the good old boys. Thanks for sharing.

Comment by VanillaMan Monday, Jan 24, 11 @ 11:54 am
That Tribune editorial is just silly. I would say that 99% of the time I purchase something online I do so because I couldn’t find that item in a store. And even though Amazon does sell literally everything, I’m not waiting 2-3 days for a package of Peppermint Patties to come to my doorstep when I can have them in mere minutes by going to the grocery store. And I’m not sure what the Trib means by “the federal solution we need”; state sales tax should only be regulated by the states. End of story.

Comment by LN Monday, Jan 24, 11 @ 12:03 pm
#

–You must have heard that at a rally bonfire with the good old boys.–

What does that mean, to someone on this planet, anyway?

I explained how I came to my conclusion, as did Rich. I’m sure you read them both before you commented.

Comment by wordslinger Monday, Jan 24, 11 @ 12:04 pm
If those hate filled Hoosiers were smarter they would not tear up their own highways and clean up the tourist potties to meet your needs. But they are ruining their own state just to spite Illinoisans like wordslinger.

As to traffic, you should park your old Plymouth, or let a younger person drive it. They are quicker and see better than you.

Comment by VanillaMan Monday, Jan 24, 11 @ 12:04 pm
Hoosiers hated Daylight Savings Time too, but they got over that.

Comment by Way Way Down Here Monday, Jan 24, 11 @ 12:05 pm
What’s Jimmy going to do with his stores? Raise a $5 sub to $5.25? People will still buy the product. McDonald’s Corp threatening to moving HQ from Oakbrook due to taxes? Didn’t think so. The move is JJ’s choice that he probably has been considering for a long time. The last minimun wage increase was 3%. Where was he then?

Companies are going to move for wide variety of reasons. Taxes may be a convenient excuse. The states will trumpet any changes that are in their favor as you would expect them to.

Comment by zatoichi Monday, Jan 24, 11 @ 12:07 pm
Due to the tax increases, Jimmy Johns is moving to Florida. That would be a loss of over a hundred jobs.

Wrong… he has not said that he is moving his headquarters. He has said that he, personally, is moving.

Comment by dave Monday, Jan 24, 11 @ 12:10 pm
Of course retirees, early or not, should pay part of the cost of their health insurance. You don’t have to convince me, or most of the commenters on here, but you do have to convince AFSCME.

Comment by steve schnorf Monday, Jan 24, 11 @ 12:13 pm
Rich should get a cut of DCEO’s budget, for doing a better job of promoting Illinois in the media this month than they are doing.

Comment by Gregor Monday, Jan 24, 11 @ 12:33 pm
–Rich should get a cut of DCEO’s budget, for doing a better job of promoting Illinois in the media this month than they are doing.–

Ain’t that the truth. What the heck has been going on there, anyway?

Comment by wordslinger Monday, Jan 24, 11 @ 12:46 pm
Don’t forget,that salmonella outbreak investigation is costing Illinois taxpayers as state employees and resources are used to figure out if the food is safe and if not, why not.
That’s a SERVICE the state provides to the public. Would Mr. Jimmy prefer to have that service cut? I’d prefer he pay for it at least as much as the rest of us if not more.
Awfully convenient of him to threaten to run to another state, now.

Comment by piling on Monday, Jan 24, 11 @ 12:47 pm
VM- The CEO at Jimmy John’s has admitted that his family has already moved to Florida. So, maybe he planned ahead to move but now gets some pr for himself and his business.

Comment by Nearly Normal Monday, Jan 24, 11 @ 1:24 pm