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What Happened to Illinois’ Economy Following the January 2011 Tax Increases? A Midwestern Comparison

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  • Crosby, Andrew W.
  • Merriman, David F.

Abstract

In January 2011, Illinois enacted legislation that substantially increased personal and corporate tax rates. Academic researchers and policymakers frequently reach divergent conclusions as to the effect of such increases on economic activity. Using employment, unemployment, and average weekly earnings data, we find that Illinois’ economy has performed less well than expected compared to a control group of Midwestern peers since January 2011. We find that, compared to historical patterns, Illinois’ employment is about 1.8 percent lower than we would expect and Illinois is losing six-one hundredths of a percent of employment relative to the rest of the Midwest each month. Also, Illinois’ unemployment rate is about 1.25 percent higher than would be expected. This can be attributed to many factors, including the income tax increase.

Suggested Citation

  • Crosby, Andrew W. & Merriman, David F., 2016. "What Happened to Illinois’ Economy Following the January 2011 Tax Increases? A Midwestern Comparison," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 46(1).
    • Handle: RePEc:ags:jrapmc:244624
    DOI: 10.22004/ag.econ.244624
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    References listed on IDEAS

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