Quinn Hits Business

Unmentioned in Governor Pat Quinn's budget address was what his 50% income tax hike proposal will do to Illinois business.

Here's what the Illinois State Chamber of Commerce says,

“If this plan were passed, Illinois would have the 5th highest corporate income tax rate in the nation, though we would be close to tied for second. Illinois at 9.7% would be surpassed only by Iowa at 12%, Minnesota at 9.8%, Pennsylvania at 9.99%, and DC at 9.975%. (All three of these states have graduated taxes, but the rates shown are the highest rate for that state.)

“This, in combination with lost incentives, would be one more reason for employers to look elsewhere to avoid Illinois’ long‐standing anti‐business climate.”

Since there are no mitigating increases in deductions for business taxpayers, the tax hike would be at least 50% on those who create jobs in Illinois.

Indeed, if “loopholes” are closed for business, its tax burden would increase by more than 50%.

Talk about a reason to think about leaving Illinois...

Or a reason not to expand or bring a new business to Illinois.

Posted first on McHenry County Blog, where you might be interested in reading

A $5 Billion Deficit, Plus $1 Billion a Year in New Spending Equals $11 Billion

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The Sound of Silence

The silence from the U.S. Chamber of Commerce and their front group, the Illinois Civil Justice League is deafening.

They often complain that our courts are clogged by frivolous lawsuits.

They often say these lawsuits are nothing more than an attempt to shake down deep-pocketed defendants.

They like to argue that these massive, multi-million dollar lawsuits are imposing a tax on every working family.

Then comes this case:

Lawsuit against Splenda settled

The makers of Splenda and Equal on Friday settled a lawsuit over Splenda's disputed advertising slogan -- "Made from sugar so it tastes like sugar."

The settlement came right after the jury in Philadelphia announced it had reached a verdict.

Chicago-based Merisant Co., which makes Equal, accused Splenda of confusing consumers into thinking its product was healthier and more natural than other artificial sweeteners. Splenda's marketer, McNeil Nutritionals, countered that it simply has a better product backed by superior advertising.

A McNeil spokeswoman said the amount of the settlement wouldn't be announced.

Merisant was seeking more than $200 million from McNeil -- at least $183 million for unfair profits since 2003 and compensation for at least $25 million in lost sales.

The active ingredient in Splenda starts as pure cane sugar but is chemically altered to create a compound that contains no calories, according to McNeil. The final product contains no sugar.

That’s right. Splenda is made from sugar. And no one is disputing that it tastes like sugar (as a user of Splenda, I can tell you it tastes alot more like sugar than Equal, which tastes like the rancid extract of dirty sweat socks to me).

But Equal didn’t like the fact that they were getting their butt kicked in the free market, with Splenda cornering 60% of the artificial sweetener market in just a few short years, so the makers of Equal filed a $208 million lawsuit.

Now, Splenda is also being sued by sugar makers.

To me, this case seems to fit the definition of a frivilous lawsuit. And the infamous McDonald's case is dwarfed by this $208 million lawsuit.

Where’s the t.v. ads and press releases from the Illinois Civil Justice League blasting corporate America for filing frivolous lawsuits? Where’s the think tank study showing how Equal’s frivolous lawsuit is driving up the cost of Splenda – now found in over 4,000 consumer products – for hard working families?

Meanwhile, the ICJL is running t.v. ads about how many lawsuits are filed in Illinois each year. I wonder how many of those lawsuits are by businesses suing each other, just like this case?

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High-Dollar Puppeteers

Our researcher Shannon has a good post over at Wonkish on the forces behind the big businesses groups raising hell in the state right now over the Governor's Healthcare/Education/Gross Receipts Tax proposal. She posed a fundamental question: Who does the State Chamber of Commerce represent?

The answer: Big Business. Well, not just big business. Big Out Of State Business.

The Chamber’s wallet is filled by multi-billion dollar corporations from out of state that have financial interest in Illinois - the same type of corporations Blagojevich claims have been skirting paying their share of taxes for too long. Take a look below at the Chamber’s main contributors (those who contributed over $5,000), and you will see some notable characters - Ameren, Harrah’s. Who among these would be most affected by the Gross Receipts Tax, and how much money are they willing to put up to stop it?

Now, we won't know who is funding the state chamber's current radio ad blitz and promotional tour around the state, but it is sure to be a similar cast of characters. Obviously, from a policy perspective, these corporations have a definite interest in defeating any proposal that shifts more responsibility toward their businesses. Additionally, being out of state, they won't benefit from any of the other items in the budget.

But, by donating to the Illinois Chamber, do these businesses taint that operation? Any effort by the Chamber to claim the mantle of defending small business becomes woefully transparent.

I'll put my question simply: Does it hurt the Illinois Chamber's argument to be associated with devil incarnate... er... Ameren right now?

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GRT and The Art of War in Illinois

There are three books I consider required reading for all policymakers, political activists, and political junkies. The Art of War is first on the list (I'll talk about the other two soon). First not because it takes pre-eminence over the other two, but because it's the most venerable, and because so many folks make reference to it without ever actually having read it. And this is a book that bears re-reading.

I was reminded of Sun Tzu today by CapitolFax. Those of you who subscribe to CapitolFax (if you don't subscribe, you really should pony up the $30 a month) know that CapitolFax founder/political reporter par excellence just spent several intimate days with Governor Blagojevich on his statewide bus tour. Based on his time spent with the Governor, Rich Miller offered up his analysis of the Governor's persona as someone who is always itching for a fight. [Editor's note: if you want to read what Rich Miller says, you need to subscribe]

Sun Tzu would not be impressed with the Governor's gladiator mentality. The ancient strategist, mandatory reading in all military officer courses through out the world (Hitler allegedly based his Blitzkrieg attack on the writings of Sun Tzu), offers us this surprising pearl of wisdom:

"To win a hundred victories in a hundred battles is not the highest excellence; the highest excellence is to subdue the enemy's army without fighting at all."

The Governor has also made it clear in many statements to the press that he's willing to drag out this fight over the GRT as long as necessary, and expend great resources -- political capital, state staff time and resources, even his own political funds and those of his allies. Sun Tzu warns against this exhaustively, but the clearest passage is this:

"When you engage in actual fighting, if victory is long in coming, then men's weapons will grow dull and their ardor will be damped. If you lay siege to a town, you will exhaust your strength.

Again, if the campaign is protracted, the resources of the State will not be equal to the strain.

Now, when your weapons are dulled, your ardor damped, your strength exhausted and your treasure spent, other chieftains will spring up to take advantage of your extremity. Then no man, however wise, will be able to avert the consequences that must ensue.

Thus, though we have heard of stupid haste in war, cleverness has never been seen associated with long delays.

There is no instance of a country having benefited from prolonged warfare."

We see this happening now. While Blagojevich's hopes of passing his original GRT have passed, and his dream of passing any form of the GRT grows dimmer every day. Meanwhile, he's been weakened politically, and his top ally Senate President Emil Jones becomes increasingly weakened by the lack of progress on electric rates and fractures within his caucus over the GRT. At the same time, Speaker Madigan and Lt. Governor Pat Quinn are growing in strength, without actually expending any of their original resources at all.

The top beneficiary of the Governor's extended anti-business campaign, ironically, is the Illinois State Chamber of Commerce. While the State Chamber is spending money and resources on organizing opposition and t.v. ads, I'm betting that their fundraising is far outpacing their expenditures. GRT has also giving them a new-found relevancy in state politics, after a period of dormancy. A new tool for organizing local businesses and expanding their base. And a key ally in the Illinois Press Association.

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