State Tax Climates, Competitiveness, and Alas, Poor Illinois

In our continuing coverage of State of the State addresses today, we noted these comments from governors of two very different states, New Jersey and Mississippi.

New Jersey Gov. Chris Christie: “If we cannot shed regulations, reduce spending, and hold the line on taxes, we cannot attract and create the jobs our citizens so desperately need.”

Mississippi Gov. Haley Barbour: “[Our] goal has to be to grow our economy faster than the nation as a whole, and we can do it. We have to focus on our advantages: low taxes, a friendly business climate, rational regulation, abundant natural resources and especially a first rate, affordable work force.”

Now comes Illinois, where lame-duck lawmakers approved Gov. Pat Quinn’s plan to balance the state budget and raised the personal income tax by 67 percent! The state’s business tax will go up by 46 percent! The Huffington Post reports that, according to the The Tax Foundationthe hike would force Illinois businesses to pay the highest combined national-local corporate tax rate in the industrialized world.

From The Chicago Tribune, “Quinn congratulates Democrats on income tax increase“:

A triumphant Gov. Pat Quinn congratulated fellow Democrats early today after the Illinois Senate and House sent him a major income tax increase without a single Republican vote in favor.

Quinn smiled and shook hands on the floor of the Senate around 1:30 a.m. after the Senate voted 30-29 for the bill, which would raise the personal income tax-rate by 67 percent and the business income tax rate by 46 percent.

If it’s a triumph, it’s of the Phyrric sort. Gov. Mitch Daniels of Indiana made two telling observations in interviews as reported in The Herald-Review, “Indiana governor says Illinois tax hike would be good news for his state“:

  • “We already had an edge on Illinois in terms of the cost of doing business, and this is going to make it significantly wider.”
  • “Folks in Illinois will eventually have to decide: Is this working well enough for us or do we want some-thing different? Point one of our anti-recession strategy here is to avoid doing what they’ve now decided to do.”

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