The ink is barely dry on the Illinois tax hikes and Wisconsin Governor Scott Walker is ready to raid the Prairie State:
Gov. Scott Walker is planning an all-out border war with Illinois, hoping his promise of a better economic climate will lure businesses away from a state considering a historic tax hike.
The Illinois House early Wednesday approved a 67 percent increase in that state's personal income tax rate, and a 46 percent increase in its corporate tax rate.
Obviously Walker's strategy is not limited to America's Dairyland. From Associated Press:
Neighboring states gleefully plotted Wednesday to take advantage of what they consider a major economic blunder and lure businesses away from Illinois.
"It's like living next door to the 'Simpsons' -- you know, he dysfunctional family down the block,Indiana Governor Mitch Daniels said in an interview...
Everything I learned about building a strong economy is that taxes are just one of many facets that enter into the decision by corporate executives to locate or relocate a company. As I noted in a post three years ago,
Then, there is the more subtle point that study after study demonstrates that lower taxes are not a critical element in determining business development decisions. There are so many sources that prove that point:
This point was not lost in the AP article:
But economic experts scoffed at images of highways packed with moving vans as businesses leave Illinois. Income taxes are just one piece of the puzzle when businesses decide where to locate or expand, they said, and states should be cooperating instead trying to poach jobs from one another.
"The idea of competing on state tax rates is . . . hopelessly out of date," said Ed Morrison, economic policy advisor at the Purdue Center for Regional Development. "It demonstrates that political leadership is really out of step with what the global competitive realities are."
By going where no other state dares to tread, Illinois could prove itself to be a policy pacesetter or the opposite — a place so dysfunctional that officials created a jaw-dropping budget crisis and then tried to fix it by knee-capping the economy.
Like the Simpsons, Illinois may have the last laugh.
All of this is not to say that taxes, particulalry the more regressive taxes cannot be burdensome to middle and low income families and the elderly.