Kristian Rouz – The State of Illinois is losing jobs and suffering investment outflows because it has the highest tax rates in the country, while its debt levels are dangerously high, a consequence of decades of fiscally irresponsible left-wing policies favoring wealth redistribution over wealth generation. In recent months, Illinois saw a net capital outflow of almost $5 trln, while mass layoffs and businesses leaving the state put the regional economy at risk.
In July alone, Illinois businesses announced 1,482 mass layoffs; 816 of them are in the manufacturing sector. Illinois' jobless rate, currently at 4.7 percent, is higher than national average of 4.3 percent, and the local labor market dynamics are alarming.
Many Chicago workers commute to their jobs from neighboring counties and cities, including Gary, Indiana. The five so-called ‘collar counties’ which surround Cook County, home to Chicago, recently posted even greater job losses. In Will County, Illinois, two prominent employers cut 363 jobs in manufacturing, logistics, and retail.
The reason is rising taxes. In July, Illinois passed an income tax increase from 3.75 percent to 4.95 percent, while the state corporate tax rose to 7 percent from 5.25 percent. American taxpayers must also pay a federal income tax and Social Security tax, not to mention other smaller taxes, affecting the local residents’ purchasing power.
Meanwhile, Illinois is barely afloat economically and fiscally due to its heavy debt burden. The state has roughly $15 bln in overdue bills, runs a $7-billion budget deficit, and has a stunning $250-billion burden of unfunded pension obligations.
Additionally, property tax increases have outpaced wage growth in Illinois, rendering mortgages an even less desirable product, indirectly hampering commercial home lendign activity in the state. Between 2000 and 2015, the Illinois property tax burden increased by 50 percent, while disposable earnings rose by 31 percent. In 2000, property taxes subtracted an average of 4.4 percent of household budgets, and in 2015, the figure was 6.7 percent, up 55 percent and counting.
Disinvestment in the Illinois economy is gaining momentum due to the high costs of doing business, overregulation, and the open prospects of further tax increases. Illinois laws provide more than 250,000 restrictions and limitations, making it very hard to build homes, start businesses, get approvals, and maintaining a sustainable manufacturing operation.
In the past five years, Illinois has lost 11,800 manufacturing jobs, while the Republican-run neighboring Indiana, which features lower taxes and less regulation, added 55,700.
All these recent developments underline an urgent necessity for broadband reform in Illinois, which could help boost the state economy, improve the quality of life and eradicate crime and drug use in the city’s desolate de-industrialized environment.