Friday, April 04, 2014

The Great Midwest Fight For Growth

Before getting into this allow me to say this is not a rant, means of ridicule or insult to my good friends living in Illinois. There is so much good about Illinois. We lived there for nearly twenty years and enjoyed all it had to offer. But as it was obvious to us back then the state was heading for trouble. At that time it was beyond our imagination just how much trouble Illinois would eventually find itself in today.

As an Illinois refugee it's comforting to know we made the right choice by moving back to our home state of Indiana over twenty years ago. When the time came to relocate and upgrade, our evaluation of real estate opportunities, government, state economy and quality of family life influenced our decision to head back to Indiana where we grew up. Our choice to invest and relocate here was a wise one and we have no regrets in our ongoing search for life, liberty and the pursuit of happiness.

Forbes online has written a brief piece outlining the sharp contrast between Indiana and Illinois regarding state government fiscal health and its impact on private sector economic growth. I became aware of the article through an email from one of my wise old superiors named Tom who is now fully retired and residing in Chicago's western suburbs.

Tom is one who can now well afford to enjoy a fine quality of life but is disgusted with where his state is heading and how his rights - constitutional and non-constitutional - are being compromised. He sees more and more of his wealth confiscated by a perpetual ruling class of re-elected cleptocrats. This was his way of congratulating me again via email for my choice to bolt Illinois long ago.

Back then Tom and some others at my agency thought I was foolish to leave for a state the Chicago media elite depict as a dirty rusted industrial landscape filled with trailer parks, rednecks and rubes and worst of all a state that lacks (gasp) diversity, culture and (yawn) urban enrichment. They would tell me I made enough to afford a nice place in the northwestern suburbs or a near north side brownstone. It was beyond their comprehension to see a successful ad executive make the choice I did. I had my reasons and kept them to myself.

Seems Illinois may soon force middle class residents to pay yet another tax, an obscene progressive income tax rate hike scheme to offset the state public union pension disaster and spending catastrophe created by individuals in the government they continue to choose. This is on top of what Chicago residents may be forced into paying regarding their property taxes to cover for their past government malfeasance. Many more businesses and residents have been fleeing the city and state for Wisconsin, Indiana and other less "progressive" states recently. It is becoming very obvious why. Tom sees it now and feels screwed by staying put.

The Forbes article Tom sent to me is titled is "Border War In The Midwest: Indiana And Illinois Fight For Growth"

From that article:

Last week, the Indiana state legislature passed further reductions in corporate business tax rates that, within eight years, will establish the Hoosier State as having the lowest business tax rate in the country. Indiana Governor Mike Pence has said that he plans to sign it into law. The bill will lower the corporate income tax rate each year through 2022, when the 4.9% rate will become the lowest corporate rate in the U.S. It also provides three options for local governments to lower the business personal property tax.

This is good news for Indiana, which is rapidly becoming a pro-growth model for states that are looking for ways to compete for employers, jobs, and tax revenues. Smart fiscal policies are improving the lives of workers across the state. Indiana now creates one out of every ten new jobs in America and actually rebates surplus funds to its taxpayers.

Unfortunately, this is bad news for Illinois, Indiana’s neighbor to the east. Illinois is wrestling with an unfunded pension liability of $187 billion, a recent ranking of last place in job creation with an anemic growth rate of 0.98, and the highest jobless rate in the Midwest. Even more troubling, Illinois’ paltry 11% increase in manufacturing jobs since 2009 has kept families who are struggling to make ends meet tied to unemployment lines. Compare this with Indiana manufacturing jobs’ recovery rates, which are close to 50%, and it is easy to see why the stakes are high for Illinois workers this election cycle.

The Forbes article is loaded with links so if you are interested click them to find out more. I swear, the Illinois ruling class seems destined to tax themselves into oblivion instead of turning their political clown car around.

The article describes how many middle class families have fled the City of Chicago over time. Many of them to Wisconsin and Indiana. I have met and known many of these other refugees and we meet we commiserate. Their chart illustrates "the demise of the foundation of an American city". While the results may not be exactly the same it's not much different from what happened to Detroit in the seventies.

If so many have left who is replacing them? Is anyone replacing them? How sad is that?

1 comment:

Dan from Madison said...

I never understood who is on the other side of all of that ridiculous Illinois debt. Who keeps buying it with the 100% certainty that it will blow up eventually? You can fight ideological fights, but you can't fight math.