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Lawmakers Studying Connection Between Tax Rates and Unemployment

Illinois lawmakers continue to work on trying to figure out how to grow the Illinois economy and create more jobs. Today, they are looking at potential connections between tax rates an unemployment.

Much of the information wasn't good news for the state--including the fact that Illinois maintained the third-highest unemployment rate in 2013, behind only Nevada and Rhode Island.

That was part of the findings from the Commission on Government Forecasting and Accountability. Some of their research included looking at what happened when states changed their personal income tax rates since 2008. Individuals and many small businesses pay at the personal rate. In states that raised rates, including Illinois, unemployment was an average of 7.3 percent. Of those who lowered the rates, unemployment averaged only 5.9 percent.

"That's where our real job growth is gonna be, is the small businesses" Rep. Wayne Rosenthal (R - Morrisonville) said. "I think that if those tax rates go down and the business climate is improved, and they put more people back to work, like I say, we'll generate revenue just because we have more people working."

COGFA also looked at states who changed their corporate income tax rates since 2008, and found similar results. The states that raised rates averaged 8.6 percent unemployment. Those that lowered corporate taxes were at only 6.7 percent.

It wasn't all bad news, though. The Department of Commerce and Economic Opportunity presented its data, which showed Illinois as the top job creator in the Midwest.

The committees also heard testimony from the comptroller's office, which reported on state fees. There was some interesting info there. The largest state fee is a $2 million annual charge for operating a nuclear power reactor. The fee that generates the largest revenue is tuition at the University of Illinois. That brought in $999 million last year.