Illinois’ businesses are taxed higher than all of their neighbors. That’s according to a new report ranking states by their burdens on local companies.
Chicago-based Anderson Economics Group’s annual report on the level of tax burdens on businesses shows Illinois companies aren’t as taxed as much as they are in states such as New York and Hawaii. But the Land of Lincoln takes a higher share of business profits than neighboring states.
Indiana and Missouri took smaller pieces of their businesses’ profits than most other states at 7 percent each. Throughout the Midwest, Ohio (7.3), Michigan (8.0) and Wisconsin (8.7) all took a lower share than Illinois, which took 9.4 percent of its businesses’ profits in 2015. That was the year after income and corporate tax rates went back down from the tax increases passed in 2011. Minnesota took 9.7 percent.
“Illinois has the fourth-highest burden [in the nation] due to the corporate income taxes,” said Jason Horwitz, Senior Consultant at Anderson Economic Group. “Of all of the taxes levied on businesses, Illinois’ corporate income tax, which included the personal property replacement tax, is the highest among all the Midwest states.”
Illinois’ higher-than-their-neighbor tax burdens have companies looking for the exit, said Chicago-based Line Group’s president Al Panico.
“I can see of no reason to move to Illinois if I were looking to,” Panico said. “The fact of the matter is that the talent pool is equally rich in the neighboring states.”
The report is different from similar studies because it measures taxes as a share of companies’ profits. The largest portion of taxes paid by businesses is property taxes, to which Illinois has a higher rate than nearly any other state. But Horwitz said Illinois took about the same property tax portion of profits as other states, not including the personal property tax.
Illinois’ corporate income tax was close to being raised by another 33 percent when lawmakers included it in a proposal the state Senate called the “Grand Bargain.” Under their proposal, which is now stalled, corporate income taxes would have been raised to 7 percent.