PEOPLE-Local 645

  • Quality of Life Alliance

State Wars

Posted by Chris Liebenthal on January 20, 2011

With many states being under new management, or in Wisconsin’s case, new manglement, there is a shuffling of stances and various states playing different hands while trying to take on their own state’s fiscal mess.

In Illinois, their solution was to raise taxes. Goobernator Scott Walkerjumped on the news and started touting how Illinois businesses should immediately relocate to Wisconsin. He was hammering away on how taxes in Illinois went up by 66%. All the conservative blogs were crowing about this as was the radio squawkers.
One thing that kept going through my mind whenever I heard someone else chirp in about how businesses were going to just come flocking over the border is wondering why they only mentioned the 66% statistic. Knowing how Walker likes to worm his way around the facts, I smelled a rat. Well, a weasel, actually.
Ironically, it was Walker himself who gave me the answer I was looking for. In a rare act of journalism, the Milwaukee Journal Sentinel actually reported this:

Speaking to reporters in Madison, Walker acknowledged tax rates will remain lower in Illinois than in Wisconsin even after the increase is approved. But he promised he would lower Wisconsin’s income and corporate tax rates before his term ends in 2015, though he stopped short of saying he would seek to set them below the rates in Illinois.

“If you’re a company, you make an assessment not just on where things are today but where they’re headed,” Walker said.

Comparing taxes between different states can be tricky, but Wisconsin’s corporate tax rate is 7.9% and its income tax rates vary from 4.6% to 7.75%, depending on the taxpayer’s income. The legislation waiting to be signed by Illinois Gov. Pat Quinn, a Democrat, would raise the state’s corporate tax rate to 7% from 4.8% and raise the state’s income tax to 5% from 3%.

He never did get around to explaining exactly why a business would come flocking to a state with higher taxes. Ah, but don’t worry. Walker said he would lower Wisconsin’s taxes…someday.
But since he mentioned about how companies look to where things are headed, he gave Wisconsin another dolorous blow. USA Today looked at the same question, but it does not come up in our favor:

Wisconsin Gov. Scott Walker, a Republican, invited Illinois businesses to relocate to his state, but J. Fred Giertz, a University of Illinois economics professor, says an immediate exodus isn’t likely.

Companies, he says, weigh workforce availability, transportation and other factors when deciding where to build or expand. “Our state is close to insolvency, and they don’t like that either,” he says.

“An immediate job killer? Not likely,” says Ed Morrison, economic policy adviser at Indiana’s Purdue Center for Regional Development. “Much more important is regaining financial stability.”

Well, in the couple months since the election, most of which was before he even was sworn into office, Walker has killed off HSR and before that has shown he is no friend of mass transit. With less transit options, it will be harder for workers to get to the jobs. If you don’t believe me, just talk to Bucyrus CEO Tim Sullivan and other business leaders.
A business leader could also see that the maneuvers of Walker and the Republican legislature is doing little to cut taxes, even less than that to create jobs, but is escalating the whole budget deficit problem.
Altogether, it’s not a pretty picture.
But it only getting worse.
Joining in the State Wars is Minnesota. They are trying to improve their fiscal situation by collecting on debts owed to them, like the nearly $60 million that Wisconsin owes them. And if Walker tries to stall payment until midyear, which he probably will, it goes up another million dollars in interest.
So, taxes staying the same (namely higher than most of our neighbors), deficit ballooning, failing transit system, and a government run amok with their antisocial agenda.
Yeah, I can just see the businesses coming in any second now. But you’ll have to excuse me if I don’t hold my breath waiting for them.
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