Illinois has one of the highest corporate tax rate's in the nation. | Stock Photo
Illinois has one of the highest corporate tax rate's in the nation. | Stock Photo
The Illinois corporate tax rate has made the state one of the most unfriendly to business in the nation, and Gov. J.B. Pritzker’s policies create a disadvantage when it comes to economic growth, a report said.
Illinois Policy reported the state’s tax rate is among the sixth highest in the nation.
Adding to concerns is Pritzker’s efforts to close what he refers to as corporate tax loopholes of $900 million after failing to deny small businesses of a COVID-19 tax credit worth $500 million to $1 billion, Illinois Policy reported.
Gov. J.B. Pritzker
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Pritzker’s efforts to close loopholes were announced at the beginning of February as part of the budget unveiling.
The state corporate tax rate is 9.5%, which is higher than all but Iowa in terms of the state’s neighbors. Iowa’s rate is 9.8%. Neighboring Missouri’s rate is 4% making it attractive to businesses. Indiana’s rate is 5.25%, but there are plans to drop it to 4.9% on July 1.
The rate can only play a role in deciding whether a company wants to start up in-state and if they want to stay in-state. Illinois can use any economic lure they can find. During the past year, the state lost 423,000 jobs as the COVID-19 pandemic took its toll on the economy. In other terms, 7% of its workforce vanished.
For Illinois and its leadership, the question should be, is the corporate tax rate worth the return it is receiving. On average, states provided 2.27% of revenue from the tax in 2018. There are also fewer paying taxes for the state. From 2010 to 2020, 253,000 residents moved from the state.
“While economists have reached different conclusions about the size of the corporate tax’s negative impact, there is an overwhelming agreement, going back at least 35 years, on the negative relationship among the corporate tax, capital formation and economic output,” according to the Tax Foundation. “Reducing the tax burden on businesses increases capital formation, productivity and the willingness to innovate, which, in turn, drive economic growth.”
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