Can One Man Smash the Business Roadblocks in Teetering Illinois?

With the recent passage of a Right to Work law in Kentucky, Illinois is nearly surrounded by states with such laws. Only Missouri, far away from Chicago, the industrial heart of Illinois, remains a union state. With at least five Right to Work bills working their way through the Missouri legislature and headed toward the state’s newly elected Republican governor, it’s likely that soon Illinois will be an anti-business island in a sea of pro-business states. Additionally, three of Illinois’ neighboring states have lower corporate income tax rates. Today Illinois demands 7.75% from its corporations, while Indiana (6.5%), Kentucky (6%) and Missouri (6.25%) ask for less.

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Such a disparity in the business climate has created what might become a bipartisan push in Illinois to create a better business climate in the state. While passing a Right to Work law is probably impossible, Illinois House Speaker Michael Madigan (D), has proposed “aggressive economic reforms.” Madigan even went so far as to suggest cutting the corporate tax rate by 50%. Working with Republican governor Bruce Rauner on such a proposal could produce a positive, bipartisan outcome in a state that desperately needs it. The Wall Street Journal reports further:

One way to do that, he suggested, is by “cutting the corporate income tax by at least 50 percent. This would allow businesses to spend more of their resources on creating jobs and improving our economy.” Knock us over with a feather. As recently as 2011 Illinois Democrats insisted on raising the state corporate income tax by 46% to a top rate of 7%. The rate fell back to 5.25% in 2015 but Democrats had been holding out for another tax increase. They lost their veto-proof majority in the House in November, however, and Mr. Madigan may now believe that simply blocking Mr. Rauner’s agenda isn’t enough.

Nearby Kentucky passed a right-to-work law last week and Missouri is expected to take up similar legislation in coming weeks. Mr. Madigan is surely mindful that this would leave Illinois, a non-right-to-work state, as an island with undesirable labor laws surrounded by states including Michigan, Indiana and Wisconsin that provide more worker choice and business flexibility.

The help can’t come soon enough. Illinois and the City of Chicago continue to drown in public pension debt and relatively slow growth. In an act of desperation, Chicago Mayor Rahm Emanuel asked Moody’s in a December letter released this week to withdraw its rating of the city’s debt that has fallen to junk status. Maybe Mr. Madigan can help.

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.