I was in an economic development meeting early this past Wednesday, right after the Illinois Senate passed the massive 66% income tax hike. The mood in the room? Bleak, at best. Being a "border" county, we in Lake are more likely than many to feel the impact as business flee across the border to Wisconsin, helped along by our friends to the north as they seek to capitalize on our woes -- and, frankly, who can blame them?
Wisconsin's new Republican Governor Scott Walker can barely contain himself, as he touts his new "Escape to Wisconsin" branding effort (and we're not talking about spending the weekend in Door County, folks):
“Wisconsin is open for business. In these challenging economic times while Illinois is raising taxes, we are lowering them. On my first day in office I called a special session of the legislature, not in order to raise taxes, but to open Wisconsin for business. Already the legislature is taking up bills to provide tax relief to small businesses, to create a job-friendly legal environment, to lessen the regulations that stifle growth and to expand tax credits for companies that relocate here and grow here. Years ago Wisconsin had a tourism advertising campaign targeted to Illinois with the motto, ‘Escape to Wisconsin.’ Today we renew that call to Illinois businesses, ‘Escape to Wisconsin.’ You are welcome here. Our talented workforce stands ready to help you grow and prosper.”
Indiana's governor Mitch Daniels has been salivating for weeks, and even has compared bordering Illinois to living next door to Homer Simpson.
Heck, even Missouri and Kentucky are getting into the act.
Maybe the saddest part of all of this is that Governor Quinn seems to be in denial about the impact this is going to have. The fact is, the business owners and wealthiest people in the state are the most mobile, and have the greatest flexibility to shift income around. I've spoken to many people in the last few days that have friends who already spend a lot of time in Florida or Michigan -- especially for small business owners, it only takes a little bit of a change to make your state of residency somewhere other than Illinois. In this day and age, since so many business are no longer "bricks and mortar" operations anyway, what's the difference in where your company is located if you are simply renting office or warehouse space? Sheesh, your workers might welcome a move to a neighboring state, as it might be financially beneficial for them as well.
So, I am very skeptical that the tax hike may even raise as much revenue as the state General Assembly predicts, much less the notion that this will not have a devastating impact on the Illinois economy.
About the only good thing you can say about the tax hike is that at least it's over, and the people in this state whose job it is to increase economic development and opportunity in this state can at least say that it may suck to be here, but at least now we know how much it sucks. Seriously, I think many businesses have not forgotten about the Gross Receipts Tax (GRT) debacle that scared the beejeebers out of anyone even thinking about locating or expanding in Illinois. What businesses hate worst is uncertainty, because they cannot plan. Folks in government who treat the taxpayers like an ATM machine and are not forced to live within their means, or go out of business, just don't get that.
In Illinois, maybe they never will.
UPDATED 9:55 a.m.: Rich Miller at Capitol Fax Blog and I are thinking alike this morning. See his wrap-up of similar stories here.
UPDATED 4:10 p.m.: Although the Tribune pointed this issue out even before the tax vote (and we discussed it in detail here), more people are now keying into the fact that even this tax hike isn't going to fix a problem that will loom in four years or so, without addressing out of control spending.