Constant talk of corporate taxes and fiscal uncertainty clouds an important fact: Illinois is a better place to do business than surrounding states.

Lost amid headlines about rising corporate taxes, companies threatening to leave the state and rival governors wooing others is an important fact: Illinois is a better place to do business than surrounding states.

A Crain's analysis of the factors most important to a healthy business climate shows that Illinois outranks Wisconsin, Indiana, Missouri and Iowa. Dozens of interviews with CEOs, entrepreneurs and experts in corporate site selection confirm that Illinois has more of what businesses need to thrive.

The state has a larger pool of talented workers, bigger markets, more money for investment and better transportation. Together, these advantages outweigh the rising taxes and state budget deficits that have put Illinois in an unwelcome spotlight.

"It's not just taxes or a patch of land: It's all about the people and the human capital," says Gregory Brown, CEO of Schaumburg-based Motorola Solutions Inc., which employs about 5,000 in the state. "The incentive is higher to stay and build on the base of talent here. There's great talent in Illinois."

Illinois' economic strengths mean the state has what it needs to remain a top business center, if it solves the fiscal problems eroding its edge in the competition for talent, jobs and capital.

At $581.3 billion in annual output, the Illinois economy is twice the size of any of its neighbors'. It's home to 31 companies in the Fortune 500, triple the closest competitor. It has double the labor force of the largest bordering state, with 6.6 million workers, nearly one-third of whom have at least a bachelor's degree. And it's connected to the rest of the country — and the world — by the nation's second-biggest airport and its largest railroad hubs.

Of course, those assets are concentrated in the Chicago area. They don't do much for Downstate businesses, which still contend with the fiscal problems — deficit spending and unfunded state pension liabilities — that threaten to overwhelm Illinois' inherent advantages as a business locale.

Rob Lowe, CEO of software startup Wellspring Worldwide LLC, picked Chicago over Philadelphia, Denver and Seattle, moving Wellspring from Pittsburgh early this year. "We'll need to raise money at some point, and access to capital is a lot better" in Chicago, he says. Photo: Erik Unger

"All the other good stuff doesn't make up for the calamity that's on the way," warns Jim Farrell, former CEO of Glenview-based manufacturing conglomerate Illinois Tool Works Inc., who is leading a budget-reform campaign by the Chicago-based Civic Committee of the Commercial Club called "Illinois is Broke."

He says the state will have to cut pension benefits drastically, and likely raise income taxes again in the coming years, to deal with more than $90 billion in unfunded pension liabilities.

"We know that they're not addressing the real problem yet. Another round of tax increases, people will say, 'Wow, this is starting to hurt.' "

More at CRAIN'S CHICAGO BUSINESS.