Without Tax Reforms, Illinois May Not Achieve Economic Growth

The first debate between United States presidential candidates Donald Trump and Hillary Clinton left voters in Illinois wishing for clues with regard to job growth and private business incentives.

Trump mentioned tax breaks while Clinton mentioned tax adjustments, but neither candidate mentioned the possibility of tax reform, which is something that the Prairie State desperately needs. Tax breaks and adjustments

After a lukewarm year for the American economy, greater economic activity in Illinois seems like a dream that may never be achieved. In terms of job growth and economic expansion, Illinois is behind the national indicators for these two important macroeconomic factors.

For most of the 21st century, U.S. presidential candidates have shied away from including tax reform in their political agendas. Just like Trump and Clinton, they have talked about tax breaks, adjustments and enforcement, but they seem to draw the line at sweeping tax reform.

Why U.S. Tax Reform is Overdue

One of the problems with a stagnant tax code is that business innovation ends up getting stifled while local governments seek dubious means of revenue. In Cook County, for example, a tax on sugary drinks has been proposed while property taxes soar. Research and development operations do not receive the tax credits they deserve, which means that innovative projects are never completed.

With a tax rate as high as 39 percent for many private business enterprises, companies cannot be entirely blamed for taking advantage of tax loopholes that allow them to direct their profits outside of the U.S. The tax code has become so complicated that the adjustments and breaks proposed by Clinton and Trump will probably have little to no effect on the economy.

How to Pass Tax Reform

Some political analysts believe that Trump and Clinton have not proposed tax reform because it would be an impossible task. While it is true that such reform will not be easy, calling it impossible is a stretch.

During his two terms, President Barack Obama presented two reform projects far more complicated than taxation. One was Obamacare, which was a massive insurance reform program; the other was immigration, which he was able to advance to a certain extent. There is no question that the next administration would be able to handle tax reform.

Comprehensive tax reform could benefit not just Illinois but also North America as a whole. With nearly 200 Canadian companies operating in the Chicago area alone, the prospect of corporate-friendly tax reform is too valuable to ignore for another four years.