Illinois Corporate Income Tax Already Among Highest in the Nation
In order for Illinoisans to have jobs, there first must be jobs to be had. Currently, Illinois is suffering under the second-worst unemployment rate in the country (9.2% in June, 2013).[i] Clearly, Illinois suffers from a dismal business climate and, in turn, its citizens suffer.
The non-partisan Tax Foundation ranks Illinois 29th on their FY 2013 State Business Tax Climate Index, down from 16 in FY 2011 (the last full fiscal year before the temporary tax hike). Buoyed only by the fact that our state continues to levy a flat income tax, the Illinois corporate tax rate of 9.5% (7% flat rate, along with the required 2.5% personal property replacement tax) gave the Land of Lincoln a Corporate Tax Rank of 47 and our $1,763 per capita property tax collections gave us a Property Tax Rank of 44. In fact, when coupled with the federal tax burden, Illinois now lays claim to the fourth-highest corporate tax rate anywhere in the industrialized world.
Currently levied at a 9.5% (7% in income tax plus a 2.5% personal property replacement tax) flat rate, Illinois corporations pay the fifth-highest rate in the country.[i] In an incredible blow to our state’s competitiveness, Illinois had ranked 21st prior to the 2011 46% temporary hike.[ii] And, under the CTBA schedule, the rate of 13.5% (11% income tax plus the 2.5% PPRT) would be the highest – by 1.5%. The 9.6% share of state revenue derived from the corporate tax in 2012 is almost double the national average of 5.3% and is the third-highest of all the states, behind only New Hampshire and Tennessee (states which levy no personal income tax).[iii] “Twenty-seven states and the District of Columbia have flat, single-rate systems” of collecting corporate income taxes, according to the Tax Foundation.[iv]
[i] Federation of Tax Administrators. “Range of State Corporate Income Taxes for Tax Year 2013.” January, 2013.
[ii] Hodge, Scott A. “Illinois Corporate Tax Hike Inches U.S. Closer to #1 Ranking Globally; Fiscal Fact No. 257.” Tax Foundation. 14 January 2011.
[iii] Federation of Tax Administrators. “2012 State Tax Collection by Source.”
[iv] Drenkard, Scott & Joseph Henchman. “2013 State Business Tax Climate Index.” Tax Foundation. October 2012, No, 64.