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This dropped into my e-mail and made a lot of sense.
This can also be an example on a national level and why jobs are fleeing the USA in General, now that it is no longer protected.
States Luring Firms From High-Tax Illinois
States considering an increase in corporate or income taxes would do well to study the recent move by Illinois to boost state revenue — which illustrates the dangers posed by high taxation.
In January, Illinois raised corporate taxes from 7.3 percent to 9.5 percent, and increased the personal income tax rate from 3 percent to 5 percent.
The hikes were prompted by a public pension liability estimated at $80 billion. Only 51 percent of Illinois’ pension liabilities are funded, the lowest percentage in the nation.
“Although the tax hikes are theoretically temporary — and start to expire in 2015 – both the rises and the continued failure of politicians to get to grips with the budget crisis are starting to worry businesses,” The Economist observes.
Due to the high taxes, Illinois-based companies are considering a move out of the state and are demanding tax breaks to remain. In May, Motorola Mobility was offered $100 million in financial incentives to keep its corporate headquarters, and 3,000 jobs, in Illinois. Navistar, a truck and engine company, has received $65 million in incentives.
Now Sears, one of the state’s largest employers, says it will move 6,000 jobs out of Illinois unless the state extends tax incentives set to expire in 2012. Two Chicago-based financial exchanges are also threatening to depart.
The result is that hikes intended to raise revenue are becoming self-defeating — the state could be compelled to spend the additional tax revenue in order to convince companies to remain in the state.
And now “the vultures are circling,” The Economist notes.
Ohio has offered Sears $400 million to move there, and Indiana has an ad campaign tempting Illinois businesses by asking if they are “Illinoyed” by the higher taxes.
Illinois’ corporate tax rate is now higher than all but six states.
Other states have done the same and not only to the corporates but to the wealthy as well.
And their revenue dropped as these are the entities that can afford to up and leave because money spent moving comes back to them later in the form of revenue not taxed as much.
VT did this with the cig tax
Along the Canadian boreder there was a cottage industry on cigs to border crossing Canadians. They figured if they sold 10 million cartons a yr and raised the tax $5 a carton it would increase income by $50 million. ( Im just throwing out numbers I dont have the actual figures here) What they didnt take into account is at $5 more a carton , many Canadians no longer bothered to cross the border for them as the higher costs resulted in less saving making the trip not worth it.
Ive seen the same thing with prop tax rates. Towns raise em to increase revenue. People dont want to pay and move. Too much inventory drives down the home prices and the higher % of a lower home value results in the same income.
It wouldn't matter what the taxes or regulations are. A Corporation will always seek an environment that offers it the most benefit.
I'm certain we have an excellent package we could offer them.
The more regulation kills jobs argument is a proven fallacy.
About your "proven fallacy:"
You are a realtor; answer this. Would a $10,000 deed filing fee help or hurt home sales? You know it would hurt. A $1,000 fee would also hurt home sales, only not as much.
A needless (or needed) regulation that costs employers $10,000 per employee, or $1,000 per employee, follows the same laws of supply and demand that houses follow. A regulation that raises the cost of a product or service by 10% or 1% does the same thing. Less employment, less production, less economic activity. EVERY regulation has a cost; the question is, how many are worth their cost? My own guess is, about one fourth of them.
What really stinks about this is that if a company is large enough, they can threaten to take their ball and go find another playing field and have the state give them a break. Same with utility prices. The msall businesses don't have enough clout to play those games. Just look at VT/NH. VT is a highly taxed state right smack dab next to a low tax state. The eastern border of VT looks like a war zone. So many businesses have picked up and moved across the river, taking good jobs with them that it is hurting the commercial tax base of the state AND the communities that suffer for it. But do you think state government gets it? No way. They want to tax, tax, tax and suck the bood out of anyone and anything they can.
Ive seen the same thing with prop tax rates. Towns raise em to increase revenue. People dont want to pay and move. Too much inventory drives down the home prices and the higher % of a lower home value results in the same income.
The libcon solution is to keep prop taxes low for homeowners and tax rental property up the wazoo. Whatcha gonna do? Rent slaves gotta live SOMEWHERE and rents thus will necessarily skyrocket.
What really stinks about this is that if a company is large enough, they can threaten to take their ball and go find another playing field and have the state give them a break. Same with utility prices. The msall businesses don't have enough clout to play those games. Just look at VT/NH. VT is a highly taxed state right smack dab next to a low tax state. The eastern border of VT looks like a war zone. So many businesses have picked up and moved across the river, taking good jobs with them that it is hurting the commercial tax base of the state AND the communities that suffer for it. But do you think state government gets it? No way. They want to tax, tax, tax and suck the bood out of anyone and anything they can.
Too bad the giveaways and carveouts and exemptions used in these wars between the states aren't ruled to be illegal, as a violation of equal treatment under the law. Then well-run states would compete based on their costs, the quality of schools and amenities and infrastructure, and all the other things that get starved so states can outbid each other.
This dropped into my e-mail and made a lot of sense.
This can also be an example on a national level and why jobs are fleeing the USA in General, now that it is no longer protected.
States Luring Firms From High-Tax Illinois
States considering an increase in corporate or income taxes would do well to study the recent move by Illinois to boost state revenue — which illustrates the dangers posed by high taxation.
In January, Illinois raised corporate taxes from 7.3 percent to 9.5 percent, and increased the personal income tax rate from 3 percent to 5 percent.
The hikes were prompted by a public pension liability estimated at $80 billion. Only 51 percent of Illinois’ pension liabilities are funded, the lowest percentage in the nation.
“Although the tax hikes are theoretically temporary — and start to expire in 2015 – both the rises and the continued failure of politicians to get to grips with the budget crisis are starting to worry businesses,” The Economist observes.
Due to the high taxes, Illinois-based companies are considering a move out of the state and are demanding tax breaks to remain. In May, Motorola Mobility was offered $100 million in financial incentives to keep its corporate headquarters, and 3,000 jobs, in Illinois. Navistar, a truck and engine company, has received $65 million in incentives.
Now Sears, one of the state’s largest employers, says it will move 6,000 jobs out of Illinois unless the state extends tax incentives set to expire in 2012. Two Chicago-based financial exchanges are also threatening to depart.
The result is that hikes intended to raise revenue are becoming self-defeating — the state could be compelled to spend the additional tax revenue in order to convince companies to remain in the state.
And now “the vultures are circling,” The Economist notes.
Ohio has offered Sears $400 million to move there, and Indiana has an ad campaign tempting Illinois businesses by asking if they are “Illinoyed” by the higher taxes.
Illinois’ corporate tax rate is now higher than all but six states.
Same reason why many North Easterners move south after retirement. The can't afford the taxes.
Sane reason why many people and businesses moved out of the cities and into the suburbs. Taxes.
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