Wednesday, June 15, 2011

The Illinois Tax Increase Aftermath

Previously I have written of the financial difficulties of states. Of particular interest, for a variety of reasons, is the precarious situation in Illinois, of which I wrote of in the January 19 post ("Financial Situation Facing Illinois")

The Wall Street Journal had a June 9 editorial titled "Illinois Tax Firesale" which contained the following excerpts:
"Illinois gained nationwide notoriety in January when Governor Pat Quinn signed into law a 67% hike in the personal income tax rate while lifting the corporate tax rate to 9.5%, the fourth highest in the nation."
"...according to the state's Department of Commerce, Illinois has already shelled out some $230 million in corporate subsidies to keep more than two dozen companies from fleeing the state. And more are on the way."
"The irony is that the recipients of these sweetheart deals are the very enterprises that Mr. Quinn was counting on to pay more taxes. Six months ago the Governor and union economists said the Illinois tax hike wouldn't chase businesses out of the state. Now Mr. Quinn is seducing businesses to stay by chopping their tax liabilities."

Various complex facets arise when taxes are increased during slow or weak economies. I have written of these facets in posts of February 23, 2010 ("Tax Increases And Our Economic Situation – Follow Up") as well as the "America’s Trojan Horse" article.

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1287.87 as this post is written

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