2007 Lane Reports

Partisan Pandering Stifles Innovation, Entrepreneurship

Sunday, April 1, 2007
by Marc J. Lane


Illinois should lead the nation in entrepreneurship and innovation. But it doesn't, and partisan bickering in Springfield and Washington helps explain why.

The state is a great trading center, a master builder of financial markets, the site of federal research labs and a powerhouse of professional talent. Yet Illinois lags 20 states in the Small Business & Entrepreneurship Council's 2006 ranking of entrepreneur-friendly states based on the tax, spending, regulatory and litigation burdens they impose on small businesses.

Political squabbling over budgets and priorities, draconian regulations and ever higher taxes contribute to the competitive disadvantage in Illinois. Gov. Rod Blagojevich's recently proposed revamp of the state's corporate tax system could, by some accounts, triple the levy on businesses. But Illinois businesses also suffer the collateral damage of political wars waged to appease rigid constituencies.

Take stem cell research: Most medical researchers believe stem cell therapy might dramatically improve the treatment of disease. According to Opinion Research Corp., 72% of Americans support embryonic stem cell research. But pro-life opponents, who see the embryo as a human life, successfully lobbied against the Stem Cell Research Enhancement Act, which President Bush unceremoniously vetoed.

Until this year, the Illinois General Assembly hadn't backed a plan to support stem cell research. Since Gov. Rod Blagojevich bypassed the Legislature in 2005 and allocated a modest $15 million over two years for stem cell study, California, Connecticut, Maryland and New Jersey have more generously funded the research, leaving Illinois' biotech companies and medical research facilities in their dust. Only with the assent of newly elected suburban Democrats did the Illinois Senate, on Feb. 23, finally vote to legalize and publicly fund embryonic stem cell research, with the House following suit within a week.

Then there's the debate over immigration, which also threatens to handicap Illinois in the race for innovation. The controversy pits xenophobic proponents of mercenary border militias and the militarization of borders against those who favor a more balanced strategy that recognizes the extraordinary achievement of newcomers.

A recent Duke University study concluded that without permanent citizenship foreign-born inventors will likely take their intellectual property where it's welcome and compete with the U.S. Illinois, where Duke researchers concluded that 27% of tech startups were launched by immigrant entrepreneurs, would be among the states hardest hit. Let's urge our representatives in Washington to enact measures that curb illegal immigration yet help rebuild Illinois' faltering competitiveness.

Petty, misguided politics will get us nowhere. Only constructive policy initiatives will give Illinois business its fair share of the resources it takes to lead.

This month's Lane Report is adapted from a guest editorial published in Crain's Chicago Business on March 12, 2007.


Marc J. Lane is the President of The Law Offices of Marc J. Lane, a Professional Corporation, and of its financial-services affiliates. He is a business and tax attorney, a Master Registered Financial Planner, and an Adjunct Professor of Law at Northwestern University School of Law.

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The Lane Report is a publication of The Law Offices of Marc J. Lane, a Professional Corporation. We attempt to highlight and discuss areas of general interest that may result in planning opportunities. Nothing contained in The Lane Report should be construed as legal advice or a legal opinion. Consultation with a professional is recommended before implementing any of the ideas discussed herein. Copyright © 2007 by The Law Offices of Marc J. Lane, A Professional Corporation. Reproduction, in whole or in part, is forbidden without prior written permission.

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