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Sunday, March 04, 2007

Governor Proposes Driving Business Out Of State

Illinois Governor Rod Blagojevich has decided on a new scheme to get money to pay for semi-socialized health care in the state. The newest way of getting money from business, or more correctly, driving business from the state, is a gross receipts tax on business.

What this tax does is taxes goods every time they change hands between companies, instead of just a sales tax at the end of the chain. So, right now the way it works is Company A makes a widget that goes into Company B's product, which is sold to the consumer. Right now Comp. B doesn't pay a sales tax when it buys the widget, instead the entire product is taxed at sale. Under Blago's plan every step gets taxed.

Proving a complete lack of economic skills, the Governor and other supporters of this plan seem to think that business will gladly take a 300% increase in taxes, and none of it will be passed on to consumers. Sure Governor, and the tooth fairy is going to come visit tonight.

Here's my guess, if this actually makes it into law, Illinois will see an exodus of business on an unprecedented scale. Companies like Caterpillar, who struggle to compete in a global market place can't handle the type of tax increases they'd see on raw materials and supplied parts and stay competitive. John Deere has been under pressure for years from other farm equipment makers, and this will be the straw to break their back, and ignore their history in the state.

Sorry Governor, this plan is a loser, that sounds great to the electorate, because they think "big bad business" will be giving them a free visit to the doctor. They'll need it when the are unemployed as those "big bad businesses" leave the state.

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1Comments:

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