Op-ed: Taxes and bad rules chase away Illinois business
Last month, Kenall Manufacturing Co., a long-standing commercial lighting manufacturer from Gurnee, broke ground at its new headquarters just 20 miles north in Wisconsin. The news that Lake County and the State of Illinois are losing yet another great business to a more business-friendly state, costing us far more than the 400 jobs in that community, still strikes me with anger and frustration. Just think about how much those 400 jobs meant to other local business in Gurnee and the surrounding area.
I doubt they only wanted a change of scenery.
In Chief Executive magazine’s May 2014 national survey of CEOs, Illinois joined the Ten Worst States for Business, beating out only California and New York (Indiana, for instance, was ranked the sixth-best state). As in previous years, fiscal mismanagement, over-regulation and taxation were listed as key reasons for the poor rating.
Simply put, Illinois’ leaders in Springfield have made our state’s business climate inhospitable, and our neighbors are more than happy to capitalize on it.
In 2011, Wisconsin passed legislation that will virtually phase out their corporate income tax on manufacturing production over the next several years, effectively cutting it from 7.9 percent to 0.4 percent. Illinois’ rate remains at a whopping 9.5 percent.
News that Office Depot chose move their 2,000 employees from to their newly acquired OfficeMax headquarters in Naperville to Boca Raton, Florida, was disappointing but not shocking. Florida’s corporate rate is 5.5 percent and has no personal income tax.
When Wisconsin lures our manufacturers away with a tax environment that’s friendly to production, can we blame them? Can we blame Florida for enticing away a name-brand business?
Not when Springfield is oblivious to the plight of these companies. According to How Money Walks by Travis Brown, Illinois lost almost $30 billion in wealth to other states between 1992 and 2010. It “walked” to states like Florida, Texas and Arizona, all three of which rank in the top 10 lowest per capita state-local tax burdens. More losses have occurred in the last three years.
The business leaders I talk to in Kane, McHenry, Kendall, DuPage, Lake, DeKalb and Will counties say they are more than willing to pay a reasonable share in taxes and follow common-sense regulations on worker safety and financial compliance.
The U.S. Grade Standards for fresh fruits and vegetables, for instance, makes sense for grocers by defining the quality standards for every type of fresh produce. The standards can then determine who is at fault between buyer and seller if a dispute arises.
But when businesses have to please more than a dozen state and federal regulatory agencies that oversee myriad of rules, as one manufacturer in my district told me, they are crushed by the time and money necessary to comply.
They bristle when, after creating innovative products consumers want, they are in essence penalized for their success with yet higher taxes from a state that can’t handle its finances.
Our job creators need more breathing room to grow. They need a comprehensive solution that addresses diverse areas like regulation, tax reform, innovation, transportation and other economic drivers. The citizens of Illinois need a modernized government that is reliable, effective and accountable.
All businesses should benefit from H.R. 309, the Regulatory Sunset and Review Act, a bill I introduced which pinpoints obsolete regulations and puts them on a path toward elimination.
All businesses — small, medium-sized and large — need a simpler, fairer tax code that rewards success and cuts down on time-consuming paperwork. Our families deserve to keep more of their own money in their pockets.
The unemployed would benefit from new skills training, education and job opportunities.
H.R. 803, the Supporting Knowledge and Investing in Lifelong Skills (SKILLS) Act, which passed the House, removes roadblocks for workers to access job training immediately, eliminates ineffective programs and instead creates a single source of support for workers, employers and job-seekers. The bill, which is on its way to reaching bipartisan agreement in the Senate, also empowers state governors to consolidate state-level training programs to eliminate waste and improve support for workers.
The unemployed need to know from the various sectors in Illinois who are hiring what specific skills they need to gain employment. They can’t afford to waste their time training when in the end they discover their skills aren’t needed. There must be stronger ties fashioned between the business community and our community colleges to succeed in quickly creating a pipeline of trained workers they will hire.
In addition to matching workers’ skills to jobs that are actually available, we need to drive innovation, fill the education gap and improve our regional transportation network.
I still want Illinois to out-compete our neighbors who compare our dysfunction to The Simpsons, as did former Indiana Gov. Mitch Daniels. I want us to be No. 1 in business development and job growth. I want our unemployment rate to drop below the national average — and keep dropping. I want companies like Kenall Manufacturing Co. to see the light and realize that the grass is greener here, in Illinois.
But we can’t do that if Gov. Pat Quinn and Springfield are committed to fiscal irresponsibility and scaring off business. We need to sit down with our neighbors and look for potential areas of job growth instead of cannibalizing jobs from each other.
Let’s not settle for dangling special tax breaks to lure certain companies back to the state at the cost of driving yet other companies away.
Let’s instead simplify and lower taxes for all businesses, large and small, and cut out burdensome rules. Let’s get our fiscal house in order so companies can expect a firm foundation on which to build their industry — not shifting sand. Let’s push ourselves to find new ways of innovating, transporting, educating and diversifying.
We all deserve a better future.
Are you listening, Springfield?
Randy Hultgren represents Illinois’ 14th U.S. Congressional District.