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* UPDATED x1 * Is Illinois’ “climate change” for real?

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* From Americans for Prosperity Illinois on Tuesday…

Today the non-partisan Tax Foundation released its 2016 State Business Tax Climate Index and Illinois has jumped 8 spots, from 31st to 23rd largely due to the end of corporate and individual income tax increases first imposed back in 2011. The rate reduction is the major reason for this 8 spot jump, showing how Illinois improve its efforts to attract jobs. Americans for Prosperity Illinois fought to preserve the expiration of the tax hikes in 2014 and will continue to advocate for a better climate for competition, including a lower tax burden.

“Illinois’ leaders should take note of this report,” said AFP Illinois State Director David From. “Our state is now in a better position to compete for jobs because we have a better business environment than in years past. However, this report also shows that the massive tax hikes being advocated by many in Springfield will have the effect of making the Land of Lincoln a worse climate for job growth. AFP Illinois will continue to educate citizens on the importance of limited government and lower taxes in order to make Illinois the economic engine of the Midwest.”

Americans for Prosperity Illinois is the state’s foremost group of grassroots activists advocating for limited government and economic freedom.

* The Wall St. Journal chimed in with its usual cluelessness…

The College Football Playoff rankings are intensely contested by teams and their fans. This week the Tax Foundation released its tax policy equivalent, which ought to be a major embarrassment for the blue state conference. […]

The trophy for most-improved this year goes to Illinois, which jumped to 23rd from 31st—no thanks to Democrats in Springfield. The Tax Foundation notes that the leap occurred “due to the sunset of corporate and individual income tax increases” that Democrats “first imposed in 2011 as temporary levies to address the state’s backlog of unpaid bills.” First-year Republican Governor Bruce Rauner has let the income-tax rate lapse to 3.75% from 5% and the corporate rate to 7.75% from 9.5%, though Democrats are trying to push them back up.

Keeping taxes low is critical to turning around the Prairie State, which trails its neighbors in economic growth. Would that liberal state politicians cared as much about their tax ranking as colleges do about their football standings.

Actually, it was the Democrats who let the tax hike sunset after Rauner demanded it.

And Rauner has been saying for months that he’s willing to raise the tax rate to 4.75 percent - a tiny bit below where we were a year ago.

Also too, where is the business boom and rising state revenues from the lowered tax rates here?

* The reality is, unlike the NCAA rankings, the myriad tax rankings out there have little to no value. We were just below the middle of the pack before the tax expiration, and yet we were losing population and jobs. We’re just above it now and yet the BLS numbers aren’t great. The October BLS state-level numbers haven’t been published yet, but BLS showed a strong national surge last month. Let’s see how Illinois does in those rankings.

*** UPDATE *** October’s report is pretty decent news for a change. We have 4 percent of the nation’s population, but got 5 percent of last month’s 271,000 new jobs…

The Illinois Department of Employment Security (IDES) announced today that Illinois’ nonfarm payroll employment gained +14,100 jobs and the unemployment rate in October held at 5.4 percent, based on preliminary data released by the Department and the U.S. Bureau of Labor Statistics (BLS). October’s gain follows four consecutive monthly declines. Illinois’ average job growth since the employment recovery began in January 2010 remains below the national average, however, and employment will not recover from the 2007-2009 recession until December 2016, according to IDES analysts. The nation is currently 3.1 percent above its prior peak level of employment.

“For 2015, job growth this month was the strongest since February and it is positive that we reversed the four-month decline preceding these numbers. Our job growth rate, however, continues to lag behind the nation,” said IDES Director Jeff Mays. “While the unemployment rate remained unchanged in October, our workforce participation rate edged up slightly as more people entered the labor force and more people found jobs during the month.”

posted by Rich Miller
Thursday, Nov 19, 15 @ 9:03 am

Comments

“Where is the business boom and rising state revenues from the lowered tax rates here?”

Until there is an answer to this question, all the rest is tax-cut fetishism, not economics.

– MrJM

Comment by @MisterJayEm Thursday, Nov 19, 15 @ 9:10 am
So, is Rauner to “blame” for the tax decrease or does he get “credit” for it? Some of the commenters must be conflicted this morning.

Comment by Anonymous Thursday, Nov 19, 15 @ 9:12 am
“The rate reduction is the major reason for this 8 spot jump, showing how Illinois improve its efforts to attract jobs. ”

I see no connection between lowering the tax rate and attracting jobs despite how many times this gets stated.

Comment by a drop in Thursday, Nov 19, 15 @ 9:15 am
The nicer Chicago suburbs and exurbs and the nicer areas in the Metro East continue drawing people regardless of the property and sales tax rates. That fact cannot be disputed. Areas close to where I grew up - such as Edwardsville, Bethalto, Godfrey, Fairview Heights and Shiloh - are booming. Housing values are steady if not up, and businesses are thriving. Yet some of those areas have very high tax rates. Edwardsville’s property and sales tax rates are sky-high - but the schools are awesome, the area is clean and safe and the commute to St. Louis is a whopping 15-20 minutes. Sometimes, you have to pay for quality.

Comment by Team Sleep Thursday, Nov 19, 15 @ 9:21 am
–Also too, where is the business boom and rising state revenues from the lowered tax rates here?–

EXACTLY RIGHT! There is no boom our small and medium businesses are floundering without DCEO help. The Governor is only engaged in getting a PPP up and running and getting those juicy EDGE credits out. Notice how he snuck in the freebies while attention was elsewhere. I bet the EDGE tax folks are OFF THE CHAIN approving sweet deals to big donors right and left!

Comment by Honeybear Thursday, Nov 19, 15 @ 9:23 am
Where can I enroll in a graduate-level economics course on “State Business Climates and their Signifigance.”

U of C? Wharton? Harvard?

Anywhere?

It’s a made-up thing by politicians.

Comment by wordslinger Thursday, Nov 19, 15 @ 9:23 am
The AFP is positioning itself for the big fight coming up over who pays. The state needs money. Lots of money. Our political leaders on both sides say they want to make cuts in spending, but it’s hard to tell what cuts, since we don’t have a final budget. So it’s all about revenue.

This won’t be a balanced decision. The weakest groups will lose. Corporate loopholes and service taxes will go down fast, when corporations and industry groups start calling and writing. Retirees vote. The rich are protected by Illinois’ regressive personal income tax. Mr. and Mrs. Working Middle Class, including the lower income ranges, are the probably the weakest link. We’ll be doing the paying, in tandem, I suspect with a lot of borrowing and fund-sweeping, kicking the can and smoke and mirrors. The usual. Hey, it’s Illinois.

Comment by Cassandra Thursday, Nov 19, 15 @ 9:25 am
“Also, too, where is the business boom and rising state revenues from the lowered tax rates?”

Exactly. If I’m using the correct data, Illinois has had four straight months of jobs losses. The unemployment rate also stopped plummeting, as it did in the months prior to this year.

http://www.deptofnumbers.com/employment/illinois/

Some acknowledge that many factors are involved in job creation, beside governments’ roles.

If folks want to play the “job creation” game, and assign a lot of value to governments’ roles in creating jobs, then we can say that Rauner has done a terrible job and is a job killer. How ironic is that?

Comment by Grandson of Man Thursday, Nov 19, 15 @ 9:26 am
“It’s a made-up thing by politicians.” Word, you are right on the money as usual.

Comment by Mama Thursday, Nov 19, 15 @ 9:26 am
These organizations “ranking” the 50 US states, are full of crap. You really think going from their rank of 31 to 23 means anything? From middling to middling? It is meaningless to compare Oklahoma to Vermont, Maine to California, Alaska to Georgia.

If these fools did auto reviews like they do state governments and economies, they would be ranking F-350s with Smart cars, Leafs with Navigators, and then telling us which vehicle is best.

Comparisons are nothing but crap when there is any attempt to compared our 50 states like this. Sorry folks - this ain’t Miss America, and then again considering what has been happening recently in that arena, Miss Arkansas would look like Daisy Duke, while Miss California would look like RuPaul.

Comment by VanillaMan Thursday, Nov 19, 15 @ 9:26 am
I think we can all agree that things in Illinois are going really well right now. It’s great to see it in print.

Comment by Emily Miller Thursday, Nov 19, 15 @ 9:27 am
Because I look to the WSJ for authoritative sports metaphors in much the same way I look to Sports Illustrated for stock tips.

But since they bring it up, Ohio State won the national championship after entering the tournament ranked 4th.

Lesson: rankings don’t matter.

Comment by Michelle Flaherty Thursday, Nov 19, 15 @ 9:34 am
State business climates are insignificant?
http://siteselection.com/issues/2015/nov/cover.cfm

Comment by Anonymous Thursday, Nov 19, 15 @ 9:35 am
Looking at the 2016 index, Illinois ranks 23, Wisconsin 43, Minnesota 47, Indiana 8, Missouri 17, Kansas 22, California 48. It would be interesting to correlate this index to job creation or something more meaningful economically. COGFA does a nice report on Illinois’ national rankings - the latest done in July 2014. Reading the various business climate rankings is insightful - we do have issues to work on (work comp, unemployment, etc.). Pages 66 through 68 summarize the rankings and relevance in the report.

Comment by archimedes Thursday, Nov 19, 15 @ 9:41 am
Michelle - to be fair, the WSJ has done some pretty good NCAA reporting over the years.

Comment by Team Sleep Thursday, Nov 19, 15 @ 9:46 am
TS, WSJ reporting remains excellent. Their editorial writers have always been wack-a-do.

Robert Novak said that when he worked there his daily job was to make the edit page writers look like fools.

Comment by wordslinger Thursday, Nov 19, 15 @ 9:50 am
AFP will resist taxes, by any means, to their last breaths. It’s their reason for being. Rauner will have to disappoint them soon.

Comment by walker Thursday, Nov 19, 15 @ 10:00 am
Can’t argue with the rankings, but they don’t really tell us much. Low taxes don’t equal a healthy state and high taxes don’t equal a failing state. A state like Minnesota ranks poorly, but last I checked they have a budget surplus, more Fortune 500 companies per capita then any other state, and higher median household income than Illinois.

Comment by Pothole Thursday, Nov 19, 15 @ 10:06 am
“Also too, where is the business boom and rising state revenues from the lowered tax rates here?”

Cmon, that’s like a patient with Hypertension, Diabetes, Lung Cancer and failing kidneys going to their life/health insurance carrier and saying, “Hey, I lowered my Cholesterol level by 5%, how come I’m not getting a rate reduction?”

I wish getting businesses to look at Illinois was as easy as fixing just one thing. It’s not.

Comment by Downstate Thursday, Nov 19, 15 @ 10:19 am
===saying, “Hey, I lowered my Cholesterol level by 5%===

Dropping the rate from 5 to 3.75 is a 25 percent reduction.

If you’re gonna use analogies, at least make them valid.

Comment by Rich Miller Thursday, Nov 19, 15 @ 10:21 am
==Where can I enroll in a graduate-level economics course on “State Business Climates and their Signifigance.” It’s a made-up thing by politicians.==

Then there’s a good chance Chicago State offers it.

Comment by nixit71 Thursday, Nov 19, 15 @ 10:24 am
—the myriad tax rankings out there have little to no value.—

Exactly. Illinois ranking up 8 pts? Great, now i will spend $10 mil to expand my business. Not

Comment by Langhorne Thursday, Nov 19, 15 @ 10:36 am
==A state like Minnesota ranks poorly, but last I checked they have a budget surplus…==

And about $20-40B in unfunded pension liabilities, depending on the actuarial assumptions used.

Comment by nixit71 Thursday, Nov 19, 15 @ 10:38 am
===Sometimes, you have to pay for quality.===
But, but, but people want Mag Mile quality services at Walmart prices.

Comment by Dance Band on the Titanic Thursday, Nov 19, 15 @ 10:41 am
Dance - you get what you pay for. Springfield’s property taxes are, at least generally speaking, fairly low. And our schools are not very good. Our infrastructure is crumbling and our leaders stand around with their thumbs up their rears. And when I buy clothes at Wal-Mart, the quality is certainly not Michigan Avenue worthy.

Comment by Team Sleep Thursday, Nov 19, 15 @ 10:44 am
“Illinois ranking up 8 pts? Great, now i will spend $10 mil to expand my business. Not”

Many would disagree, at least when it comes to Chicago. The “Chicago metro area” recently led the nation for two years in a row in business locations/expansions.

Chicago was also recently reported to have strong small business job growth.

“And about $20-40B in unfunded pension liabilities, depending on the actuarial assumptions used.”

Problems exist in many places. States that are touted as business-friendly have lower incomes, less people with health insurance, lower unionization rates, etc. Kansas is in a world of hurt, with tea party/AFP policies taking their toll.

What I don’t agree with is people who have made or make lots of money in Illinois dissing the state as terrible for business. Sorry but I don’t buy that.

Comment by Grandson of Man Thursday, Nov 19, 15 @ 11:01 am
So does the Gov “own” this improved ranking? I’ll wait for a comment from the Gov’s office applauding the Governor for controlling taxes.

Comment by DuPage Bard Thursday, Nov 19, 15 @ 11:03 am
@Grandson - But $20-40B of unfunded pensions while having one of the highest progressive state income tax rates in the country? And taxing every penny of retirement income?

Comment by nixit71 Thursday, Nov 19, 15 @ 11:17 am
“But $20-40B of unfunded pensions while having one of the highest progressive state income tax rates in the country? And taxing every penny of retirement income?”

Illinois is in far-worse fiscal shape than Minnesota.

In Illinois, our pension payments were being made in full when we had the 5% state income tax. If we had a higher income tax rate for years, ballpark to many neighbor states, I seriously doubt we’d be in as deep of a hole as we are today.

Sorry but I don’t live in a utopian world. Many states have different problems. Some states that are touted as business-friendly are not friendly or as friendly in other ways, such as social tolerance, average incomes, health insurance expansion for the poor, union rights, etc.

Texas has the most people without health insurance and the most working at or below the minimum wage. I was reading that Texas was trying to push Creationism on its schools. No thanks, not for me.

Comment by Grandson of Man Thursday, Nov 19, 15 @ 11:30 am
@Rich
=Actually, it was the Democrats who let the tax hike sunset after Rauner demanded it.=

Yeah, right Rich. Madigan and Cullerton are SOOOO interested in meeting Rauner’s demands.

Be honest. They didn’t raise the taxes from 3.75% to 5% because they didn’t want to OWN the tax increase. They wanted that on Rauner.

They still do. Would you dispute that that is a major reason for them not proposing a tax increase as part of a budget compromise?

Comment by Arizona Bob Thursday, Nov 19, 15 @ 11:31 am
Wow, Nixit, Minnesota sounds like an awful place!

Comment by wordslinger Thursday, Nov 19, 15 @ 11:33 am
@GRandson

=Illinois is in far-worse fiscal shape than Minnesota.=

Of COURSE it is Grandson, but it’s more a function of political culture than tax rates.

I have many friends and relatives from there, and by and large the state and local governments there have the confidence that taxes will be spent fairly and effectively. In Illinois, no rational person could have such confidence. Minnesota didn’t let their problems become the disaster that Illinois pols did. They set a level of government service and compensation upon which the people would agree, and the state delivers on that level of service. They don’t give away the store to unions and their government and crony political base and refuse to take the political hits for paying for it as Illinois pols do.

Also, the “diversity” of Minnesota is pretty much whether you’re Swedish or Norwegian, with a few Indians and Somali’s mixed in. The racial “spoils” system doesn’t exist there to anywhere NEAR the extent in Illinois, and they don’t tolerate gang violence the way Illinoisans do.

Comment by Arizona Bob Thursday, Nov 19, 15 @ 11:40 am
“Minnesota didn’t let their problems become the disaster that Illinois pols did.”

Minnesota also didn’t coddle taxpayers with decades-long low state income tax rates, which no doubt contributed to our mess.

Comment by Grandson of Man Thursday, Nov 19, 15 @ 11:48 am
=Minnesota also didn’t coddle taxpayers with decades-long low state income tax rates=

Your previous comments have indicated you’re a state worker Grandson. Do you really believe it has been the taxpayers who have been coddled? You know there are 7 states with ZERO income tax? They are all doing much better than IL.

Comment by Robert the 1st Thursday, Nov 19, 15 @ 11:55 am
==In Illinois, our pension payments were being made in full when we had the 5% state income tax… If we had a higher income tax rate for years, ballpark to many neighbor states, I seriously doubt we’d be in as deep of a hole as we are today.==

But MN has always had much higher tax rates than IL and still doesn’t make its full pension payment. In 1998, MN’s lowest income tax brackets was double IL’s flat rate. And they still have $20-40B in pension debt? Not much proof that higher taxes and fiscal responsibility go hand-in-hand.

Considering the demographic differences (overall and minority population), I would hardly call Minnesota’s economic model one to mirror. But I’d trade for their politicians.

Comment by nixit71 Thursday, Nov 19, 15 @ 12:17 pm
“You know there are 7 states with ZERO income tax? They are all doing much better than IL.”

What state isn’t doing better than Illinois, regardless of state income tax rates?

Texas and Florida, two states without an income tax, have many people working at or below the minimum wage and without health insurance. It was reported that an estimated 850,000 Floridians have no health insurance. Walking around sick and skipping medication because of no access to healthcare is definitely no way to go through life, man.

Some of the states without an income tax have small populations also and less of a demand on state services.

Sorry, but people complaining now that the state income tax needs to be increased and who used state goods and services for many years at tax rates much lower than most neighbor states, that’s not very seemly of them.

One might even say they’re takers.

Comment by Grandson of Man Thursday, Nov 19, 15 @ 12:19 pm
==Also, the “diversity” of Minnesota is pretty much whether you’re Swedish or Norwegian, with a few Indians and Somali’s mixed in. The racial “spoils” system doesn’t exist there to anywhere NEAR the extent in Illinois…==

Props to AB for going where few dare tread.
MN has over 2x less African American population and 3x less Hispanic. And IL has over 1.2M more folks living below poverty level than MN (and 3% higher poverty rate). What is the associated cost of all this? And without this added cost, plus an income tax rate 2x higher than IL, why does MN still have $40B unfunded pensions?

Makes me wonder when folks tout the Minnesota Model, what they’re truly implying…

Comment by nixit71 Thursday, Nov 19, 15 @ 12:29 pm
AB, tell us more about the “racial spoils system.”

Nixit, what’s the skinny on the “associated costs” of black and Hispanic citizens?

Comment by wordslinger Thursday, Nov 19, 15 @ 12:34 pm
nixit71:

What data are you looking at. I don’t see the $20-$40B number you say and what I see is that their pension system is 75% funded. That’s the number I’m interested in. While that’s certainly not perfect it’s a heck of a lot better than Illinois.

Comment by Demoralized Thursday, Nov 19, 15 @ 12:35 pm
==MN has over 2x less African American population and 3x less Hispanic==

What in the heck does that have to do with anything?

Comment by Demoralized Thursday, Nov 19, 15 @ 12:43 pm
==Nixit, what’s the skinny on the “associated costs” of black and Hispanic citizens?==

Not sure. You may want to ask Minnesota.

Comment by nixit71 Thursday, Nov 19, 15 @ 12:54 pm
Rich,
If as you say, the Dems let the tax expire after Rauner “demanded” it, why is it inaccurate for the WSJ to credit Rauner with presiding over the lapse of the income tax?
Actually, the Dems let the tax expire because they figured Rauner would ask them to raise it back, and they wanted to blame him rather than wear the jacket for it themselves. They obviously miscalculated. The disaster now under way could have been avoided if the Dems had taken Quinn’s suggestion and made the tax hike permanent while he was still in office.

Comment by jim Thursday, Nov 19, 15 @ 1:15 pm
===why is it inaccurate for the WSJ to credit Rauner with presiding over the lapse of the income tax?===

Because he wasn’t governor at the time.

Comment by Rich Miller Thursday, Nov 19, 15 @ 1:16 pm
Shame on me, but when AFP is mentioned my eyes glaze over. Americans For Prosperity is another Koch funded, ALEC led lobbying group. Nothing in their policies or practices do anything but hurt the middle class and help the “millionaires and billionaires”. Just because it sounds cliche it doesn’t discount that that is what they do.
Thanks
AL

Comment by AL Thursday, Nov 19, 15 @ 1:33 pm
The Church of lower taxes and economic growth is a conservative article of religion in this country. They don’t want empirical analysis anywhere near it, because they’re not interested in the truth; they’re interested in specific constituents who want their taxes lowered, namely their principal campaign donors.

Comment by Angry Chicagoan Thursday, Nov 19, 15 @ 1:50 pm
==MN has over 2x less African American population and 3x less Hispanic==

What in the heck does that have to do with anything?

Sounds like something my not at all racist uncle might find highly significant. I can’t imagine why anyone else would.

– MrJM

Comment by @MisterJayEm Thursday, Nov 19, 15 @ 2:37 pm
==Americans For Prosperity is another Koch funded, ALEC led lobbying group. Nothing in their policies or practices do anything but hurt the middle class and help the “millionaires and billionaires”.==

Well, they never said which American’s prosperity they were for…

But your spot on about these altruistic coalitions hovering over govt. Let’s not forget “A Better Illinois” which was the public sector union coalition calling for higher taxes on all its citizens. We would lead me to ask, “A better Illinois for whom?”

Comment by nixit71 Thursday, Nov 19, 15 @ 2:46 pm
If Governor-elect Rauner had simply kept his mouth shut on taxes, the Dems in the GA still would have let the higher rate sunset on time. Nothing he said had anything to do with it.

Pretty weasely for Dem apologists to try to put it on him.

Comment by walker Thursday, Nov 19, 15 @ 4:47 pm
The governor-elect had minuscule influence, if that, on the decision of a Democratic legislature and Democratic governor to allow the sunset to occur as they had planned it to when they passed it.

Democrats refused to pass a balanced budget or raise taxes last year. They did both of those things themselves, and they did the state no favors in the meantime. Them blaming the governor-elect is just a desperate excuse.

Comment by Anonymous Thursday, Nov 19, 15 @ 6:38 pm
When the income tax was 5%, the business climate ranking was 31 but Illinois was basically paying its bills, including its full pension payments. Now that the tax rate is 3.75%, the business climate ranking is somewhat better at 23, but the state is not even coming close to paying its bills.

Well, I think the former combination of circumstances, by any reasonable criteria, is better than the latter. Should the business climate ranking go back to 31, or dare I say, fall further to 35, 40 or even 45, life will go on (last I checked, California, at 48, was not exactly Syria). But if the state continues to not pay its bills for an extended period of time, it will eventually be forced by the courts to pay its contractual obligations (which at that point will be a huge percent of its incoming revenues) and then it will either have to raise taxes far higher than would currently be necessary, or cut spending on other things to the point that life in Illinois becomes unlivable. I am dumbfounded at the reluctance of many to accept that relatively modest tax increases today are preferable to a scorched earth policy that leaves an entire state in ruins 10 years in the future.

Comment by Andy S. Thursday, Nov 19, 15 @ 11:37 pm