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January 12, 2011

Illinois legislature votes to drive state's businesses, people away

Well, not in so many words.  But what else to make of an act that seems certain to choke the life out of a weak economy?

Fox News, January 12:
Democrats in the Illinois Legislature on Wednesday approved a 66 percent income-tax increase in a desperate and politically risky effort to end the state's crippling budget crisis.

The increase now goes to Democratic Gov. Pat Quinn, who supports the plan to temporarily raise the personal tax rate to 5 percent, a two-thirds increase from the current 3 percent rate. Corporate taxes also would climb as part of the effort to close a budget hole that could hit $15 billion this year.

The higher taxes will generate about $6.8 billion a year, Quinn's office said -- a major increase by any measure. In percentage terms, 66 percent might be the biggest increase any state has adopted while grappling with recent economic woes.
I suspect that the revenue estimate in the third paragraph assumes economic activity will remain constant despite the tax increase. Is that a valid assumption?

UPDATE:  News-Gazette (Illinois), January 19:
The founder of [sandwich shop chain] Jimmy John's said he has applied for Florida residency and may recommend that his corporate headquarters move out-of-state as a result of the Illinois tax increases enacted last week.

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