Illinois Braces for Next Move from Businesses Owners After Tax Increase
New Jersey Gov. Chris Christie recently attacked Illinois Gov. Pat Quinn describing him as a disaster for passing legislation that increases personal and business income taxes for Illinois residents. We won't lose any business to Illinois as long as Pat Quinn's the governor, said Christie.
Gov. Quinn pushed for and got legislation that raises personal income taxes from 3 percent to 5 percent and corporate business taxes from 7.3 percent to 9.5 percent. State lawmakers hope that the increase will make up for a $15 billion deficit.
Other governors, however, are using this tax increase as a way to attract Illinois residents and business owners into their states. Gov. Christie is a good example, but Indiana and other states are also flirting with Illinois business owners.
Even though the Illinois Legislature and the governor have determined that a tax hike is the best way to handle the deficit, business owners can still find ways to operate profitably in Illinois, said Amy Murphy, director of Corporate and Community Services for Joliet Junior College. It is important for business owners to look at all their options.
Nevertheless, that hike in taxes has upset both residents and business owners particularly small business owners. One company, Glenview-based payroll processing specialist SurePayroll, completed a survey of several hundred Illinois small business owners as a way of gauging their reaction to the recent tax hike. The survey was reported on chicagobusiness.com, a blog powered by Crains Chicago Business.
It is no surprise that 90 percent of the respondents were not happy about the tax hike, but what is interesting is that 25 percent reported that they are seriously considering relocating. Additionally, three out four of the respondents believe that the tax increase will have a negative effect on their businesses with more than half reporting that it will impact small businesses harder than large ones.
There are some, however, who believe that the majority of Illinois businesses will stay in Illinois once they know the truth about the way some states treat the business community. In a March 4, Associated Press article, Jake Braun of the advocacy group For a Better Chicago said, We understand that governors have to be cheerleaders for their states, but the claims Gov. Christie is making are so far from the truth. The group has run ads in New Jersey responding to Gov. Christies remarks about Gov. Quinn. The ads say, Rhetoric is nice, reality matters and focus on New Jerseys high property taxes and cost of living.
Additionally, some experts believe that most Illinois businesses will not leave the state. In a February 12 story written by Chris Wetterich for The State Journal-Register, Dan McMillen, professor of economics for the University of Illinois said, "It's definitely something the state should be concerned about, but I think it [the scope] is exaggerated a little bit. Businesses like to say that they leave states because of tax issues, but businesses are not actually all that mobile, and I think its a lot less common for businesses to leave from tax issues as is commonly believed."
Nevertheless, some businesses have already begun to leave. The Northwest Indiana Times (NWI Times) is reporting that many businesses on Chicagos South Side and suburbs are moving to Indiana. But this is not a new trend for businesses close to the Indiana border. Often businesses have ties to both Illinois and Indiana and will chose to move to Indiana simply because they have more business coming from that side of the border. But the recent tax hikes may make it difficult for them to sell their Illinois locations.
In a story posted on January 23, the NWI Times reported that business owner Bob Scheuneman, for example, expects to have some trouble selling his Lansing property. It's going to make it harder to sell, he said, because some people just arent going to want to deal with those tax rates.
The debate will continue until small business owners and residents decide to move or stay. Illinois business owners have options and we want to be there to help them find them, said Murphy. Business owners should take advantage of our Illinois Small Business Development Center (ISBDC) and the various learning opportunities we provide. Often, as with the ISBDC, we are working in partnership with the Illinois Department of Commerce and Economic Opportunity (DCEO). Our states economy cant get better unless we work together and become more innovative.
The Illinois Small Business Development Center at Joliet Junior College is one of the small business service providers in the Illinois Entrepreneurship Network and is funded in part through a cooperative agreement with the U.S. Small Business Administration and the Department of Commerce and Economic Opportunity.
For more information about all the programs available to small business owners and their employees at Joliet Junior College, call Amy Murphy at 815-280-1418, or
e-mail amurphy@jjc.edu. The ISBDC can be reached at 815-280-1400, or at sbdc@jjc.edu.