Op Ed Piece submitted to The Chicago Tribune January 18, 2011

Op Ed Piece submitted to The Chicago Tribune January 18, 2011

January 19, 2011

Letters Editor
Chicago Tribune

In the final hours of the veto session of the 96th General Assembly, both Houses, with the strong support of Governor Quinn, passed steep tax increases on both personal and corporate income and suspended net operating loss deductions. These measures take Illinois further down the path of business uncompetitiveness, dropping Illinois from 23rd to 35th out of the 50 states, according to the non-partisan Tax Foundation's 2011 State Business Tax Climate Index.

Here in Illinois, we should be afraid, very afraid, for our jobs and business climate. Only 92 miles from Chicago, Wisconsin Governor Scott Walker urges Illinois businesses to - œEscape to Wisconsin.-  And to our east, Governor Mitch Daniels of Indiana (ranked 10th in the Business Tax Climate Index), observes, "If you want to bring new jobs to your state the last thing you do is make it more expensive to hire people."

To be sure, Illinois desperately needs to raise revenue to close its budget gap, and we applaud the Legislature and the Governor for finally beginning to seriously address our state's deficit. But, the rush to raise taxes as the primary fix in their deficit reduction package is short-sighted. Rather, the House leaders should have adopted ways of raising revenue that do not negatively impact business investment and job growth while, at the same time, taking equally serious steps to reduce public spending.

As written, this new tax increase will only discourage the job creation that Illinois vitally needs. It's a consequence our state can ill-afford.

Consider Groupon, a venture-backed company that in only a few years has created hundreds of local jobs and brought hundreds of millions of investment dollars to Illinois from sources primarily outside our state. At precisely the time that Groupon and other local companies' success is starting to win recognition for our fertile business environment, our Governor and state legislation risk throwing it all away with this dramatic tax increase that we believe will dampen new business formation in our state.

As the group that represents venture capital and private equity firms active in Illinois, the Illinois Venture Capital Association is intimately involved in identifying, funding and growing the young, vibrant enterprises that comprise Illinois' job creation and tax revenue engine. One specific action we believe the Governor and House Speaker Madigan should have taken: approve the continuation of the Technology Development Account (TDA), which allows up to 1% of the Treasurer's investment portfolio to be invested in venture capital and private equity.

This proven program has already created 3,600 new jobs in Illinois and attracted millions of new investment dollars from outside the state all with no cost to the government. The Illinois Senate has approved the continuation and expansion of TDA three times, only to have the bill die three times in the House Rules Committee. Approving job creation programs such as this would help mitigate the job destroying impact of the new tax increases.

We urge all Illinoisans to speak up and ask our Democratic leaders to consider all budget-neutral, proven initiatives, including TDA, that can limit the negative impact the new taxes will have on our business community. We also ask that the leadership redouble its efforts to reduce state spending and improve program efficiencies.

Without a corresponding focus on program cost-effectiveness and new job creation programs and policies, Illinois will not come close to balancing its budget and providing for a stable economic environment so necessary for continued and increased business investment

Maura O'Hara
Executive Director
Illinois Venture Capital Association

Jim TenBroek
Illinois Venture Capital Association