In a way, it ‘s a fairly obvious situation. After the financial crash in 2008, Illinois is facing serious budgetary shortfalls–as are many states. To make up the gap, the General Assembly passed a law in January that will raise personal and corporate income tax rates for four years. Seems simple, right?
Well, now things have gotten a bit more complicated. Doug Oberhelman, the chief executive officer for Caterpillar, Inc., the construction equipment giant based in Peoira, which also happens to employ 23,000 Illinoisans, sent a letter to Governor Quinn last weekend with a very simple message. The tax increase makes Illinois seem unappealing to Caterpillar and it may cause the company to take jobs elsewhere.
The law increased personal income tax from 3 to 5 percent. The corporate rate increased from 4.8 to 7 percent. Both rates are scheduled to stand for four years, after which the tax rates will fall but still remain higher than their previous levels. Oberhelman reported that the new rates will cost Caterpillar ‘s Illinois employees an addition $40 million this year. With his message he included letters from the governors of Texas, South Dakota and Nebraska, each of which highlighted that state’s business friendly attributes.
For more information on Illinois’s new tax law, or for other tax concerns, contact the Chicago tax lawyers at Horowitz & Weinstein.