By Michael Lucci -
An ironic piece of legislation has been proposed in the Illinois Senate. Senate Bill 3126 would reduce the corporate income tax rate from 7 percent to 3.5 percent, but also raise the minimum wage nearly 50 percent, to $12 from $8.25.
Cutting corporate tax rates is a great idea in the state with the fourth-highest corporate tax rate in the industrialized world. However, raising the minimum wage is a terrible idea in a state that already has the highest unemployment rate in the Midwest, and the third-highest unemployment rate nationally. It’s nonsensical that a provision to raise youth unemployment is necessary to pass a prudent tax reduction.
Even Illinois senators must realize that raising the price of work by 50 percent results in less work being demanded. The Illinois Senate should spell out exactly how many low-wage earners they are willing to have laid off so the Senate can pretend to help the poor.
The Congressional Budget Office estimated that raising the minimum wage to $10.10 would put 500,000 Americans out of work. An Illinois Policy Institute analysis shows that a $10 wage would put at least 10,500 low-skilled workers out of work in Illinois. Raising the minimum wage to $12 would cause substantially more damage.
Even Warren Buffet spent time Monday morning warning about the negative effects of raising the minimum wage, pointing out that it is not an effective government poverty-fighting tool.
Cutting taxes on businesses should be done without raising youth unemployment.
Michael Lucci is Director of Jobs & Growth at the Illinois Policy Institute