Tax Hikes Chase Jimmy John's From Illinois

Since the onset of the Great Recession, nearly every state has experienced budget shortfalls. Most have recognized the need to cut spending and restrain government employee benefits rather than raise taxes. Not all do, however: As reported last week, Illinois is going the opposite direction with massive tax hikes on individuals and businesses.

Immediately upon the announced tax hike, governors in surrounding states began pleading with Illinois job creators to come somewhere where they will be wanted. Wisconsin, Indiana and Missouri governors had press releases and media appearances outright thanking the Prairie State representatives for incentivizing their residents to leave. On the other hand, Illinois Gov. Pat Quinn congratulated the Legislature for passing the increase, and when asked about businesses leaving, responded, "Lots of luck to them, but that's not going to happen."

Jimmy John Liautaud begs to differ.

Liautaud is the founder of the Champaign-based Jimmy John’s Gourmet Sandwiches, which now has more than 1,000 stores around the country. He has started gathering information on other states, with an eye toward relocating the chain’s corporate headquarters.

"All they do is stick it to us," Liautaud said, adding that the Illinois Legislature "snuck [the tax increase] through," and that the governor showed "a clear lack of understanding" about a measure that left businesses feeling "pummeled."

Jimmy Johns had been looking to expand further in Illinois, but those plans have been suspended while the company is instead being courted by "multiple business-friendly states." Liautaud has already moved his family to Florida, where there is no personal state income tax.

"I’m not sophisticated enough, smart enough or politically correct enough to absorb it all," Liautaud said – but apparently he is smart enough to vote with his feet.

While it's true that businesses consider more than tax rates when making site selections and few have the liquidity to relocate immediately, it's also foolish to ignore the evidence that lower taxes and fewer regulations do in fact lead to increased economic growth.

Foolish is as foolish does: A spokeswoman for the Illinois Department of Commerce and Economic Opportunity said the tax increase will "strengthen the economy, attract new investment and put people to work."

Meanwhile, Jimmy John’s will soon be taking hundreds of jobs out of the state, and that’s going to hurt. Jimmy John Liautaud was raised in Champaign, donates millions of dollars to the University of Illinois, owns thousands of acres of farmland and sponsors a Central Illinois performing arts group. He opened his first sandwich shop in 1983 and has built up the business ever since.

"I'm not a greedy American pig," Liautaud added. "I'm a hard-working, bread-baking, meat-slicing delivery guy who happens to be immensely successful."

Another immensely successful guy will be taking his talents to South Beach.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.