Progressives like to assert that their tax and spend programs are good for job creation and good for jobs, generally. This actually is a testable claim, and we have an ongoing experiment of the thesis in Illinois. How’s this working out for the Illini? The Wall Street Journal has in interim report.
At the start of this year, the Progressives in control of the Illinois state government rammed through a $2 billion tax increase: the corporate tax rate exploded by 30% (the personal income tax was worse, a 67% increase, but that’s for another time). Naturally this has no effect on jobs or job creation goes the Progressive hypothesis. It’s almost true for the Big Businesses favored by Illinois’ Big Government. The Chicago Board of Trade and the Chicago Mercantile Exchange have received from Uncle Patty Quinn’s generosity $85 million in tax breaks if only they’ll keep their jobs in Chicago and not relocate to another state. Sears Holdings Corp. is the beneficiary of $15 million in tax credits for the same reason. Santa Quinn has, in rough total, handed out $500 million in goodies to some 80 Big Businesses if only they’ll keep their jobs in Illinois. That’s actually a relatively small sum, only a bit over six-tenths of one per cent of that $2 billion tax hike. But it’s not chump change for the companies getting this special dispensation.
And it’s not chump change for all the mom and pops and other small and medium businesses who have to pay all of that tax hike because they can’t afford the Progressives’ vig. The solution for them? Hit the bricks. Or see their friendly neighborhood community organizer.
Did this job-creating and budget-fixing tax rise achieve its purpose? The Illinois Policy Institute says that over the next 15 years, the revenue lost from all these special corporate tax deals, along with the revenue lost from companies (big and small) departing, will exceed the monies raised from the increase. And the budget deficit hasn’t gotten any smaller.
On another note, we have this, from Lawrence Lindsey in his 1990 The Growth Experiment: How the New Tax Policy Is Transforming the U.S. Economy:
Politicians who assert their role in directing funds to the “industries of the future” want to play entrepreneur with someone else’s money. They are ill suited to the role. The politician who takes over the direction of capital is quickly revealed as this year’s amateur following last year’s experts.