Illinois corporations are facing a 46% tax hike as that state looks to balance its budget, which could mean new business for neighboring states like Iowa. Wisconsin and Indiana hope the tax increase will encourage Illinois business to relocate to their states.
Rick Dickerson, C.E.O. of the Greater Dubuque Development Corporation, says even with the Illinois tax increase, Iowa can’t compete. “When we’re recruiting industry and they see our top corporate rate, which is all they get to see in a comparative chart, we are not competitive,” Dickerson says. “So what we need to do is get rid of the junk and publish the actual rate and we would be in good position to compete with anyone.”
The comparative chart shows Iowa’s corporate income tax between 6 and 12%. Dickerson says the actual rate would include the federal deductions Iowa businesses are eligible for which adds up to 50%. Illinois’ corporate income tax will increase to seven percent on top a 2.5% property tax already in place.
That brings the total in Illinois to 9.5% for the next four years. Debbie Durham, the incoming Iowa Department of Economic Development chief, says she plans to reduce corporate income and property taxes and go after Illinois businesses.
“I think that the timing is right and particularly in light of what Illinois is doing,” Durham says. “I basically reached out to my team yesterday and said you know every contact we have with every Illinois company start calling them because our governor is taking an entirely different approach. We’re going to create a pro-business culture here, unlike what Illinois is in the process of doing.”
Durham says she wants the economic development department to become more responsive to the needs of commercial and industrial businesses. Durham says proactive economic development will help meet Governor Terry Branstad’s goal of creating 200,000 new jobs in Iowa by 2016 and some of those jobs could come from Illinois businesses looking to relocate.