Failed welfare state Illinois is bankrupt and is raising its income tax 66% to 5% and corporate tax 45% to 7%. Lower tax states are preparing for an exodus of businesses and residents.

By LAUREN ETTER And DOUGLAS BELKIN at WSJ

EXCERPTS:

The Illinois legislature moved a step closer Tuesday to passing its first tax-rate increase in nearly two decades to dig the state out of a $13 billion budget hole despite steep opposition from Republicans.

Under the current version of the bill, the individual income-tax rate would jump to 5%, from the current 3%, a 67% increase. That is more conservative than last week’s proposed 5.25% rate, a 75% increase. Also, the corporate tax rate would increase to 7%, from the current 4.8%.

“Illinois has been an economic boon to Florida,” said Collin Hitt director of policy for Illinois Policy Institute, a nonpartisan free-market think tank. “Through a slow drip, we’ve lost thousands of taxpayers. If this bill passes, it will probably burst the pipes.”

“In April, the state of Illinois will have a payless Friday,” Mr. Mautino said. Illinois already claims one of the lowest credit ratings among U.S. states.

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