Economic Development: The Foundation of Infrastructure
It’s hard to find an elected official who doesn’t favor building a strong Illinois infrastructure. We hear much about roads, airports, railroads, and bridges. Some consider education infrastructure. Yet many people forget economic development—fueled by a favorable business climate—is not only part of the infrastructure, it’s the foundation upon which the state’s vitality is built.
Business—the economy—fundamentally supports everything else: jobs, consumer spending, philanthropy, and tax revenues that pay for state and local government services. An Illinois business climate that encourages job growth and investment is essential to the state’s long-term health.
Unfortunately, Illinois has one of the highest costs of doing business in the country. And the cost of doing business is the number one reason companies give for wanting to leave Illinois. These conclusions are outlined in a recent analysis done by the Kellstadt Graduate School of Business at DePaul University for the Illinois State Chamber of Commerce Economic Development Council.
The same DePaul study analyzed all 50 states and found a direct correlation between the cost of doing business and job growth. In 2001, states with the lowest cost of doing business, on average, had greater job growth. Illinois fared poorly on both counts. In 2002, Illinois lost 67,000 jobs—23,000 in manufacturing.
Those findings should sound alarm bells for Gov. Blagojevich and the Illinois General Assembly, who are trying to solve a huge state budget deficit and plan for the state’s future. Uninformed opinion leaders have suggested business isn’t paying its fair share. Some view business as an infinite wellspring of dollars to be tapped. However, the facts bust both of those myths.
Business not only is paying its fair share, it’s paying more than its fair share. Business pays 48.3 percent of all state and local taxes in Illinois, compared to a national average of 41.3 percent, according to a Chamber-commissioned report by Ernst & Young. Further, despite the economic slowdown and a sharp drop in corporate profits (8 percent nationally) since 1999, Illinois state and local business taxes have increased 20 percent over the last three years. Over the decade, state and local taxes have increased faster than non-business taxes.
By contrast, a report of the Federation of Tax Administrators suggests the personal tax burden on the part of individual Illinois taxpayers ranks 46th out of 50 states. Illinois’ elected officials should be cautious in their desire to pluck additional dollars from business, which is already struggling with economic recovery. Instead, the governor and legislators should be looking for ways to reduce the cost of doing business in Illinois. They need to find ways to attract and keep companies that create jobs. In addition to cutting the cost of government, lawmakers must resist dictating expensive wage, workplace, and health care mandates. We must invest in Illinois’ future.
On the proactive side, Illinois has several successful economic development programs. We should keep the best and make the most of successes, such as existing employment training programs. Investing in the job-creating infrastructure also means supporting research and development—especially in health and technology—promoting hospitality, encouraging logistics and transportation, and sustaining basic industry before it disappears.
By not taking these actions, we risk losing more jobs, resulting in lost tax revenue and less consumer purchasing power. Less tax revenue and reduced purchasing power puts us at risk of extending the economic slowdown—and the very budget crisis we’re trying to eliminate. Remember, it’s the economy. IBI
Business—the economy—fundamentally supports everything else: jobs, consumer spending, philanthropy, and tax revenues that pay for state and local government services. An Illinois business climate that encourages job growth and investment is essential to the state’s long-term health.
Unfortunately, Illinois has one of the highest costs of doing business in the country. And the cost of doing business is the number one reason companies give for wanting to leave Illinois. These conclusions are outlined in a recent analysis done by the Kellstadt Graduate School of Business at DePaul University for the Illinois State Chamber of Commerce Economic Development Council.
The same DePaul study analyzed all 50 states and found a direct correlation between the cost of doing business and job growth. In 2001, states with the lowest cost of doing business, on average, had greater job growth. Illinois fared poorly on both counts. In 2002, Illinois lost 67,000 jobs—23,000 in manufacturing.
Those findings should sound alarm bells for Gov. Blagojevich and the Illinois General Assembly, who are trying to solve a huge state budget deficit and plan for the state’s future. Uninformed opinion leaders have suggested business isn’t paying its fair share. Some view business as an infinite wellspring of dollars to be tapped. However, the facts bust both of those myths.
Business not only is paying its fair share, it’s paying more than its fair share. Business pays 48.3 percent of all state and local taxes in Illinois, compared to a national average of 41.3 percent, according to a Chamber-commissioned report by Ernst & Young. Further, despite the economic slowdown and a sharp drop in corporate profits (8 percent nationally) since 1999, Illinois state and local business taxes have increased 20 percent over the last three years. Over the decade, state and local taxes have increased faster than non-business taxes.
By contrast, a report of the Federation of Tax Administrators suggests the personal tax burden on the part of individual Illinois taxpayers ranks 46th out of 50 states. Illinois’ elected officials should be cautious in their desire to pluck additional dollars from business, which is already struggling with economic recovery. Instead, the governor and legislators should be looking for ways to reduce the cost of doing business in Illinois. They need to find ways to attract and keep companies that create jobs. In addition to cutting the cost of government, lawmakers must resist dictating expensive wage, workplace, and health care mandates. We must invest in Illinois’ future.
On the proactive side, Illinois has several successful economic development programs. We should keep the best and make the most of successes, such as existing employment training programs. Investing in the job-creating infrastructure also means supporting research and development—especially in health and technology—promoting hospitality, encouraging logistics and transportation, and sustaining basic industry before it disappears.
By not taking these actions, we risk losing more jobs, resulting in lost tax revenue and less consumer purchasing power. Less tax revenue and reduced purchasing power puts us at risk of extending the economic slowdown—and the very budget crisis we’re trying to eliminate. Remember, it’s the economy. IBI
