With budgets tightening on the federal level and revenue down as a result of the Great Recession, some states are in serious financial trouble. Will they look to the already battered manufacturing sector to try to rebuild their treasuries? You betcha. That's already happening in Illinois, where the state is getting ready to boost the corporate income tax rate from 4.8 percent to 7 percent. The Daily Herald in suburban Chicago had a feature story on the issue a few days ago, "Business leaders bash corporate tax hike." The story quotes Martin Matushek, a co-owner of West Dundee, Ill.-based M2 Polymer Technologies Inc., who predicts an exodus of jobs to neighboring Wisconsin and Indiana. "We have three employees now, and I was hoping to hire two more, one for customer service and an outside sales person, but not now," Matushek told reporter Anna Marie Kukec. Matushek wrote a letter (PDF) to Gov. Pat Quinn, saying: "Your tax hike has cancelled all plans that we will add people here in Illinois. We may seek out-of-state agents for our products but none in Illinois... You have just killed all hope of bringing new jobs to Illinois. When property values improve, we plan to move to a new state that lacks Illinois' entrenched corruption and is friendly to business." Seeing businesses relocate from one state to another based on taxes is unproductive. But, unfortunately, this is a trend we expect to see in the next few years.
Get ready for battles over state taxes
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