August 21, 2014
By Michael Lucci

Illinois’ 2011 income tax hike put the brakes on the state’s private-sector jobs recovery.

According to data from the Bureau of Labor Statistics, Illinois’ monthly job creation has slowed down since the state’s historic 2011 tax hike. Meanwhile, the rest of the country accelerated its jobs growth.

Job losses from the Great Recession began for Illinois and the nation as a whole in January 2008. Private-sector job losses extended until January 2010, when the jobs recovery began.

Illinois bounced back well in the first year of jobs recovery. In fact, the Land of Lincoln ranked fifth in the Midwest and 14th nationally in private-sector job creation during the first 12 months of recovery, from January 2010 to January 2011.

why_last_1

Then Illinois made a historic mistake in January 2011, when it raised state income taxes by 67 percent for families and small businesses, and by 46 percent for corporations. State government took a week of income from every family and small business.

But that wasn’t all. The 2011 tax hike indicated to anyone in doubt how Illinois planned to address its drastically underfunded pension programs and overall fiscal crisis. Unlike Wisconsin, which enacted labor reforms and reigned in government spending, Illinois policy leaders solved their problems by hitting every Illinois family and business in the pocketbook.

Businesses and job creators took note, and saw that the nation’s worst pension crisis would be handled through more taxes, rather than real reform.

In the three-and-a-half years since the tax hike, Illinois has ranked dead last in the Midwest and 44th nationally for private-sector job creation.

why_last_2

Monthly job creation has slowed down by a quarter since the tax hike, and employment growth has been cut in half. As a result of the 2011 tax hike mistake, Illinois dropped from fifth to worst for job creation in the Midwest over the entire period of recovery from the Great Recession.

why_last_3

The 2011 tax hike was a historic mistake, and the state has paid dearly for it. Illinois is now further from a full jobs recovery than any other state in the country.

Policy leaders should admit that the tax hike was a mistake, sunset the tax hike and then roll back the tax rate all the way to 3 percent.

TAGS: income tax, jobs