Illinois’ business climate in decline since 2018, as most neighbors improve
During the past five years, Illinois’ business tax climate has gotten worse while all neighboring states improved or held steady. Six companies this year said they are relocating, and the exodus may not be over.
New business rankings found Illinois has gotten more hostile towards business as its neighbors improved or stayed the same, according to the Tax Foundation’s 2023 State Business Tax Climate rankings.
Illinois ranked 36th in the nation for business tax climate, down seven spots from the 2018 rankings.
The rankings use five major taxes: corporate, income, sales, property and unemployment insurance.
This year, businesses such as Tyson, Citadel, Boeing, Caterpillar, FTX and Highland Ventures announced moves out of Illinois. Caterpillar’s former CEO warned Illinois a decade ago that changes needed to be made, yet the state has moved in the wrong direction for the past five years as far as tax policy.
McDonald’s Restaurants CEO Chris Kempczinski said his company might also leave.
“It has become increasingly difficult to operate a global business out of the city of Chicago,” Kempczinski said. “Make no mistake… McDonald’s commitment to Chicago is not corporate altruism. It’s not open-ended. It’s not unconditional. As a publicly traded company, our shareholders wouldn’t tolerate that.”
The stifling business atmosphere takes a toll on the working class. As of September, Illinois had the highest unemployment rate in the nation.
Gov. J.B. Pritzker, who’s up for re-election, claims his administration has focused on working families. Taxes and unemployment make that questionable.
Illinois’ tax burden is largely driven by property taxes, which are the second highest in the nation. The Tax Foundation said Illinois’ flat state income tax is a bright spot that keeps its tax ranking from sinking lower.
Pritzker tried to change that in 2020, putting $58 million of his own money into the campaign for a progressive state income tax. Voters rejected his proposal.
Now Amendment 1, a property tax hike disguised as a “workers’ rights amendment,” would worsen Illinois’ business climate by keeping commercial property taxes on the rise. The proposal at the top of the Nov. 8 ballot would empower government unions to make significantly greater demands, which taxpayers would be forced to fund.