Gov. Pat Quinn (D-IL), unlike so many other governors across the country, decided to responsibly deal with his state’s budget gap by raising revenue to offset some of the impact of severe budget cuts. Amongst the tax increases Quinn and the Illinois legislature approved was an increase in the state corporate income tax rate from 4.8 percent to 7 percent.
In response to the tax change, the multinational corporation Caterpillar has threatened to move jobs out of Illinois. CEO Doug Oberhelman — who has hosted Republican fundraisers in his home that featured former First Lady Laura Bush — told Quinn in a letter that “the direction that this state is headed in is not favorable to business, and I’d like to work with you to change that.”
Sen. Mark Kirk (R-IL), rather than defending the choices made by the elected officials of his home state, then piled on, claiming that because of the tax increases, Illinois now has “the highest corporate taxes in the industrialized world”:
In comments before and within his address to a formal gathering of Tazewell County Republicans, however, U.S. Sen. Mark Kirk, R-Ill., blasted Gov. Patrick Quinn specifically for the increases.
Because of Quinn’s “grievous error,” Kirk said, Illinois now has “the highest corporate taxes in the industrialized world.”
Even with the increase, Illinois doesn’t have the highest corporate tax rate in the United States, much less the entire world. By increasing its corporate income tax rate to 7 percent (which is coupled with a 2.5 percent property tax), Illinois still has a lower rate than Iowa, Pennsylvania, the District of Columbia, and Minnesota, and has a rate roughly equal to that of Alaska.
But, more importantly, Illinois’ rate is only that high on paper. Much like the federal corporate income tax, Illinois’ corporate tax is riddled with loopholes and giveaways, which allow Caterpillar to drive its effective tax rate all the way down to just 1.4 percent.
Kirk has taken the side of corporations against the middle class before, but this is a particularly egregious case of going to bat for a corporation that’s holding people’s livelihoods hostage in order to preserve tax giveaways. During the 2010 campaign, Caterpillar gave Kirk $24,000 and the endorsement of its chairman, Jim Owens.
(HT: ThinkProgress reader Mitch)