In 2008, lawmakers in Springfield cobbled together a $530 million rescue package for Chicago’s transit system, which was on the brink of collapse because of sky-high labor and legacy costs. Just this week they pushed through $300 million of tax credits for the Chicago Mercantile Exchange, Chicago Board Options Exchange and Sears to prevent the businesses from fleeing to lower-tax climes. Both Indiana and Ohio have been aggressively poaching Illinois businesses, especially since January, when lawmakers raised the state income tax to a flat 5% from 3% and the corporate tax to 9.5% from 7.3%.
The special carve-outs may stop Sears and the financial exchanges from flying the coop, but the income-tax hikes will still prove job-killers. While the jobless rate in other Midwest states has stayed relatively flat over the past year, Illinois’s unemployment rate has risen to 10.1% from 9%. Most of the lost jobs are in information technology and financial services, which are some of the easiest to move.