Illinois Woes Continue to be Indiana’s Gain

Indiana has had more than a little success in attracting businesses to head immeditely east — from Illinois to the Hoosier state. A Rockport Register Star political reporter says the numbers show just how bad the situation is in his home state.

The Land of Lincoln is a tough place to do business to be sure.

For example, Office Depot has been capturing plenty of headlines. The company recently merged with OfficeMax, and its executives were pondering whether to use OfficeMax’s Naperville headquarters or Office Depot’s Boca Raton, Fla., site.

The Sunshine State won out. It’s not hard to figure out why.

Just consider:

  • Illinois has a corporate tax rate of 9.5 percent (7 percent income, 2.5 percent personal property replacement tax) while Florida has a 5.5 percent corporate tax rate.
  • Illinois has a personal tax rate of 5 percent while Florida has none.
  • For every $100 worth of payroll, Illinois employers pay an average of $2.81 for workers’ compensation insurance, compared to $1.84 in Florida.
  • Illinois’ minimum wage is $8.25 per hour, compared to $7.79 in Florida.

You see, it’s not just Florida that Illinois has trouble competing against. It’s just about every state that has a leg up on the Land of Lincoln.

Just consider:

  • A study conducted by the state of Oregon found that Illinois has the fourth-highest workers’ compensation rates in the nation.
  • Illinois also has the fourth-highest minimum wage in the nation.
  • Illinois’ corporate tax rates rank, you guessed it, the fourth-highest in the nation.
  • Given these numbers, it’s little wonder that Illinois has the 11th-lowest rate of entrepreneurship in the U.S., according to the Kauffman Entrepreneurial Index.

And small businesses are the major job generators in the economy.

According to the U.S. Small Business Administration, small firms employ just more than half of the private sector workforce and created nearly two-thirds of nation’s net new jobs over the past 15 years. Please keep in mind, every big company started out small.

 

Land of Leavin’?: Illinois Pushing People to Call Indiana Home

During a first week of January when most legislatures were just beginning their work for the year, our neighbors to the west were taking action that prompted two responses:

  1. Relief, once again, that I work and live in the Hoosier state
  2. Thanks for further opening the state borders with one-way traffic heading from Illinois to Indiana

What are they in the process of doing in Springfield? Increase individual income, corporate income and cigarette taxes to historially high levels. A 75% hike for citizens, 49% for businesses (resulting in the dubious distinction of the highest corporate tax rate in the country and the largest combined {national and state} rate in the industrialized world) and more than 50% on cigarettes.

The Tax Foundation goes into detail on the changes, but common sense tells one that the effort to fix past out-of-control spending is misguided. Economic development officials up and down the west side of Indiana (along with state officials) should be working overtime to attract businesses, entrepreneurs and anyone else looking to escape the Land of Economic Lunacy.

Freedom Comes With a Big (Tax) Price

Freedom is a good thing. But I’m not sure you, I or others necessarily feel better this week at the opportunity to enjoy Tax Freedom Day for 2010.

According to the Tax Foundation, national Tax Freedom Day is tomorrow — April 9. That means Americans will have worked well over three months of the year  before they have earned enough money to pay this year’s tax obligations at the federal, state and local levels. (Due to different income levels and tax burdens, the Tax Freedom Day for Hoosiers was actually Tuesday).

Tax Freedom Day is one day later than in 2009, but more than two weeks earlier than in 2007. The reasons for the three-year change: recession, temporary tax cuts and several tax repeals. Nevertheless, we will pay more taxes in 2010 than we will spend on food, clothing and shelter combined.
 
See what I mean; not exactly cause for celebration. The Tax Foundation offer the following facts and figures:

  • Tax Freedom Day does not count the deficit even though deficits must eventually be financed. If Americans were required to pay for all government spending this year, including the $1.3 trillion federal budget deficit, they would be working until May 17 before they had earned enough to pay their taxes – an additional 38 days of work.
  • In 2000, Tax Freedom Day was celebrated May 1, the latest date ever. A string of tax cuts between 2001 and 2003 pushed Tax Freedom Day up by two weeks, so that it fell on April 16 in 2003 – at the time the second earliest Tax Freedom Day since the Johnson administration.
  •  Five major categories of taxes dominate the tax burden. Individual income taxes – including federal, state and local – require 32 days’ work. Payroll taxes take another 25 days’ work. Sales and excise taxes, mostly state and local, take 15 days to pay off. Corporate income taxes take eight days, and property taxes take 12. Americans will log six more days to pay other miscellaneous taxes, most notably including motor vehicle license taxes and severance taxes, and about half a day for estate taxes.
  • Each state has its own Tax Freedom Day. Because of modest incomes and low state and local tax burdens, Alaska and Louisiana celebrate Tax Freedom Day earliest on March 26, the 85th day of the year. Connecticut celebrates last on April 27, the 117th day of the year, because income per capita is higher than in any other state.
  • Tax Freedom Day answers the basic question, “What price is the nation paying for government?” An official government figure for total tax collections is divided by the nation’s total income. The answer this year is that taxes will amount to 26.89 percent of our income, and the stretch of 99 days from January 1 to April 9 is 26.89 percent of the year. Income and tax data are then parsed out to the states, yielding 50 state-specific Tax Freedom Days.