Illinois slides toward bottom of nation in business tax ranking

(Illinois News Network) – Even before Illinois lawmakers approved an income tax hike last summer, the state’s total tax burden on local businesses pushed past its neighbors and closer to coastal, high-tax states, according to a new report.

Anderson Economic Group compared states based on how much businesses are taxed at the state and local level as a percentage of pre-tax gross operating margins. Illinois businesses, for instance, pay 9.74 percent of earnings after the cost of doing business but before taxes are taken out. That puts the state 35th in the nation, down from 32nd last year and 25th four years ago. The analysis found Oklahoma, Oregon and North Carolina had the lowest tax burdens, putting those states in the top spots. Vermont, Maine and North Dakota had the highest tax burdens and were at the bottom of the list.

Illinois’ 9.74 percent overall tax burden was above all of its neighboring states and closer to Minnesota’s 10.34 percent overall tax burden on businesses there. Minnesota ranked 38th.

Jason Horwitz, AEG’s senior consultant and lead on the study, said researchers considered a number of taxes that businesses pay with the biggest being property taxes.

“The tax burden over the last couple years in Illinois has actually ticked up a bit,” he said.

This is the ninth annual report that AEG has released. AEG takes a deep dive into 11 different business costs.

The study used 2016 numbers, meaning that the higher corporate and personal income tax rates lawmakers passed last summer weren’t accounted for in the latest study.

“The state’s 43rd in corporate income tax without taking into account the fiscal year 2017 increase,” Horwitz said. “We’ve got to imagine that’s only going to go up.”

Oklahoma had the lowest percentage in the country and Maine had the highest.

A state’s tax burden, Horwitz said, often gets counterbalanced by the value of an educated workforce or a world-class city like Chicago. Outside of the Chicago area, however, businesses may take a closer look at the cost incurred simply to be in an area.

“Businesses there are deciding between locating in Rockford or Appleton, Wisconsin,” Horwitz said.