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Posts Tagged ‘Illinois Economy’

There is No Santa Claus for Illinois Unemployed after 2011 Income Tax Hike

In Illinois, Income Tax Rates, Job Creation, Unemployment on December 2, 2011 at 12:17 am

People told me a Christmas tree dealer’s showroom in nearby North Barrington, Illinois is great for kids because it displays some 200 decorated Christmas trees.  My young sons happen to be connoisseurs of garish Christmas lights.  Thinking that walking the boys through an indoor forest of lit Christmas trees would occupy some free time on a gray, rainy Saturday, I looked up Tree Classics to check hours and address.

I was surprised when the Tree Classics website only showed an address in Wisconsin. [1]  Could I have the wrong name?  I tried an internet search and sure enough, Tree Classics was listed in yelp.com reviews and in business directory Manta.com as located on North Pepper Road in North Barrington, Illinois.  Except that in 2011 Tree Classics moved a bit closer to the North Pole. 

These days, it seems most anything not bolted down is leaving Illinois for Wisconsin, Indiana, or some other state.  Motorola, Caterpillar, Sears, Navistar, Chicago Board Options Exchange and the Chicago Mercantile Exchange are some of the big Illinois employers demanding tax concessions to keep them in the state. [2] [3]  “We’re not real happy with the tax rates and we’ve made our feelings known on the subject,” said Irene Rosenfeld, CEO of Illinois-based Kraft Foods. [4]

I could not find any articles about why Tree Classics left Illinois.  It might be about taxes.  Chicago is a much larger market than Milwaukee which makes the move questionable, but perhaps they have their reasons.  Maybe something else dragged Tree Classics out of Illinois.

As we saw in my post https://econscius.wordpress.com/2011/08/03/stimulus-recipient-among-illinois-mass-layoff-notices-indiana-welcomes-another-illinois-company/, smaller companies are leaving Illinois.  Smaller companies do not have the pull to extract tax breaks from the state legislature.  The departure of a company with 50 or 75 employees may not even get a notice in the newspaper, but the state’s job market shows the toll. 

The Department of Labor graph below clearly demonstrates how the Illinois income tax grinched the Illinois job market:

Pertinent facts: 

1. From January 2010 to December 2010, Illinois employment grew by 173,795 jobs.  The Illinois unemployment rate declined from 11.2% to 9.2%, converging with the national average.

2. In January 2011, Illinois passed a 66% increase to the personal and corporate income tax rate, made retroactive to January 1, 2011. [4]

3. After Illinois companies had a few months to react to the tax increase and explore their options, the state unemployment rate surged from 8.8% in March to 10.1% by October.

4. After the December 2010 peak of 6,052,731 jobs, Illinois lost 93,787 jobs through October.

5. The US unemployment rate has been steady in 2011, being at 9.0% in both January and October. [5]

Why did 2010’s job growth in Illinois abruptly end in 2011, then reverse into job losses and a 10.1% unemployment rate even as the US national unemployment rate held flat at 9.0% in 2011?  Might income tax rates have something to do with it?  Job losses continue:  we have breaking news literally today that Unilever is eliminating all 800 office and manufacturing jobs at the Melrose Park, Illinois headquarters of its Alberto-Culver unit. [6] 

There is no Santa Claus for Illinois workers in 2011 and my sons need another interest to replace seeing groves of articifical Christmas trees.  Perhaps they could count moving vans on the interstates leading out of Illinois?

  How the Grinch Stole Christmas cover.png

[1] http://www.treeclassics.com/Contact-Us-Information-s/63.htm

[2] http://www.chicagotribune.com/business/breaking/chi-caterpillar-tax-vote-sign-of-illinois-dysfunction-20111201,0,3403745.story

[3] http://www.chicagotribune.com/business/breaking/chi-motorola-mobility-could-lay-off-790-and-keep-state-tax-break-20110619,0,2021941.story

[4] http://www.chicagotribune.com/business/columnists/ct-biz-1106-phil–20111106,0,2792639.column

[5] http://money.cnn.com/2011/01/13/news/economy/illinois_corporate_tax_hike/index.htm

[6] 2010 and 2011 employment and unemployment data and graph retrieved 12/1/11 from http://data.bls.gov/timeseries/LASST17000003 (US) and http://data.bls.gov/timeseries/LNS14000000 (Illinois).

[7] http://www.suntimes.com/9185920-417/unilever-closing-alberto-culvers-melrose-park-plant-offices.html

Grinch pictures from Wikipedia Commons; Christmas tree picture from www.treeclassics.com.