The consequences of massive tax increases

Illinois Loses Most Jobs in Nation Following Massive Tax Increase

Mike Brownfield


Correlation doesn’t necessarily equal causation, but some disturbing correlations are evident in the nation’s economic woes.

Take Illinois. If you take a look at the chart below, you can see a startling picture. In Illinois, employment numbers increased steadily until January 2011, at which point they took a sharp dip downward—the same time that state’s governor announced plans to increase the personal income tax rate by 67 percent and the corporate rates by 46 percent. And things keep getting worse.

The Illinois Policy Institute reports:

Illinois lost more jobs during the month of July than any other state in the nation, according to the most recent Bureau of Labor Statistics report. After losing 7,200 jobs in June, Illinois lost an additional 24,900 non-farm payroll jobs in July. The report also said Illinois’s unemployment rate climbed to 9.5 percent. This marks the third consecutive month of increases in the unemployment rate.

Illinois started to create jobs as the national economy began to recover. But just when Illinois’s economy seemed to be turning around, lawmakers passed record tax increases in January of this year. Since then, Illinois’s employment numbers have done nothing but decline.

On top of that, BusinessInsider reports that “Moody’s Investors Service continues to rate Illinois at the lowest level among states (A1 with a negative outlook), and said issuing long-term debt to pay bills ‘would significantly increase the state’s bonded debt burden.’”

Illinois’ sharp turn for the worse calls to mind another set of data. Nationally, the economy went from losing 841,000 jobs in January 2009—the recession’s low point—to gaining 229,000 jobs in April 2010. But within two months—after Obamacare passed—that all changed, and the economy ground to a halt. (See the chart below.) Heritage’s James Sherk writes:

In May 2010, the job situation stopped improving. Job creation dropped to just 48,000 net private sector jobs, and private-sector hiring took a new course. From May 2010 onward, private job growth improved by only 6,500 jobs per month—less than one-tenth the previous rate.

Again, correlation can’t prove causation, but the data are hard to ignore, especially amid the cries of the business community against regulations and taxation. The lesson for policymakers? At the state level and the federal level, taxing, spending, and regulating have consequences.