Illinois taxes make it tough for businesses
SPRINGFIELD – Starting a small business is tough; starting one in Illinois is even more difficult.
Over the years, Illinois lawmakers have created a system that could make even the most intrepid entrepreneur shudder.
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.
• 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.
But a company as big as Office Depot has the political clout to go to the Illinois General Assembly and push for special tax breaks.
For a small entrepreneur, the story is quite different.
They lack clout to cut sweetheart deals with politicians. And yet they have to compete against large corporations that do get such deals. More significantly, Illinois small businesses are saddled with the state’s burdensome taxes and regulations.
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.
• 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 ranks, you guessed it, the fourth highest in the nation.
The secret to turning things around is pretty straightforward: lower taxes and fewer regulations for all businesses and individuals – not just the politically favored.
With that, more people will be willing to take a chance on Illinois.
• Scott Reeder is a veteran statehouse reporter.