Illinois number 31 on 2014 State Business Tax Climate Index

In 2011, the state of Illinois passed an increase in its income tax. Since the passage of that increase, the state has plummeted to number 31 in a yearly report by the Tax Foundation called the State Business Tax Climate Index in the last few years. In the year of the tax increase, Illinois was listed as number 15 on this yearly report.

However, this is only one factor contributing to the business environment in our state. There are five primary areas the report takes into account: individual income tax, major business taxes, property tax, sales tax and unemployment insurance. These five categories are further broken down into over 100 variables.

The implication of Illinois' fall in the rankings over the years is that it has become increasingly difficult for businesses to operate in our state. The statistics also seem to bear that out. Taking the five primary categories into consideration, Illinois ranks as number 11 for individual income tax, number 47 in corporate taxes, number 44 in property tax, number 33 in sales tax and number 43 in unemployment insurance.

The only thing keeping Illinois from dropping even lower in the rankings is the current individual income tax rate. However, the state is considering changing the individual income tax from a flat rate to a progressive rate. That would drive the state even lower on the State Business Tax Climate Index, which could make Illinois less attractive to new business from outside the state.

These rankings may paint a dismal picture for business in our state, but it doesn't have to be that way. Admittedly, there is room for improvement. However, with planning, a business can thrive no matter what the business tax climate may be.

Source: madisonrecord.com, Illinois' unfriendly business environment killing jobs, growth, Ben Vanmetre, Oct. 10, 2013

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