The Tax Foundation recently did an analysis of a tax proposal from Illinois Governor Pat Quinn (D) that would raise the personal income tax rate from 3 percent to 4.5 percent and the corporate income tax rate from 7.3 percent to 9.7 percent. Staff Economist Josh Barro, author of the 2009 State Business Tax Climate Index (a study that measures how well a state’s tax system encourages investment by maintaining a broad tax base and low rates), analyzed the tax proposal’s effects on Illinois’ business tax climate ranking. Based on current tax law, Illinois ranked 23rd out of 50 states for business-friendliness of its tax code. With Quinn’s plan in effect, Illinois’ ranking would have sunk to 31st. In this edition of the Tax Policy Podcast, Barro talks with Kristina Rasmussen, Executive Vice President of the Illinois Policy Institute, heading the organization’s Springfield office. Barro and Rasmussen discuss the effect of Gov. Quinn’s plan on the Prairie State as well as what Illinois should do over the long term to avoid future budget crises. Click here for the podcast.
