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on the other hand, pays more state income tax, $745, but less sales and property tax, $1,215 and $747 respectively.
Overall, according to the Foundation, the state and local tax burden of the Illinois resident is 25 percent higher than
that of the average Missouri resident.
Douglas Whitley, president and chief executive officer of the Illinois State Chamber of Commerce, says you really need to
look at the overall tax burden to understand its impact on business. And, he says, when you look at Illinois, you find a
state that does not have a tax climate that is friendly to business.
"We are a high-tax state on employers for a variety of reasons," said Whitley, "one of which is that the political
philosophy in Illinois has long been - and this goes back I think 50 or 60 years - to try to get as much tax out of the
employers as you can so that the voters don't feel the brunt. (Gov.) Rod Blagojevich is a good example of this. He has
consistently talked about raising taxes on employers while trying to protect the individuals, even though the individual
income tax rate in Illinois is as low as it can get in the country, other than no tax at all. Blagojevich is a politician
trying to play to the masses, and that is being reflected in the tax philosophy of Illinois government," he added.
According to Whitley, the best tax is one that has a low rate, a broad base and is easy to comply with - but that's not
what Illinois has. He says not only is Illinois' property tax burden high, but the system is terribly confusing and
difficult to understand. The same thing is true, he says, of the sales tax system.
"One of my members was making a point awhile back," Whitley said. "He told me that he has a big three-ring binder book on
sales taxes from around the nation. He said that the state of Michigan's sales tax is on one page while the state of
Illinois' sales tax runs for about 20 pages front and back."
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Patrick McKeehan, executive director of the Leadership Council Southwestern Illinois, says that increasing the corporate
income tax - as the Illinois General Assembly is considering - would fall much harder on small businesses than on larger
ones that have operations in multiple states. He said state income taxes can really be a non-factor depending upon the type
of business and how it is organized.
"Large, multi-state corporations have more options on how they handle corporate income tax than single-state companies,"
McKeehan said. "A prime example is the automotive assembly plants that don't record revenue at the point of production. For
a large assembly plant, state corporate income tax is not that big of a deal. Invariably these types of companies tend to
qualify for various types of tax credits and tax breaks because of their large investments in equipment which can neutralize
or reduce their tax burden. What they tend to be more interested in are local tax issues, things like property taxes and
utility taxes, etc."
But Whitley says that a state's overall tax burden is an important factor to business and can cause them to leave for
better tax climates. He regularly cites an example of a particular Illinois company that has moved most of its operations to
Alabama.
"From the employer's perspective, it's all about the cost of doing business," Whitley said. "Sometimes our politicians
lose site of the fact that it's the total cost of doing business that ultimately forces investors to make decisions about
where they want to be. When the total cost of doing business in the state gets too high, those investors may very well take
their investment opportunities to another state."
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