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. If made law, the measure would go a long way in closing the considerable tax gap between Wisconsin and its southern neighbor — something the governor hopes will provide an opportunity for job growth here.
"While Springfield is looking to balance their budget by excessive increases in taxes on both employers and individuals, we're sending a meassage ... that we are looking to cut taxes and reduce the overall tax burden," Walker said. "We think this is a tremendous example for us to make to businesses south of the border."
The governor is planning a major marketing campaign on the Wisconsin-Illinois border, tied to the tax increase. He said he will also target the Rockford and Chicago markets.
"We've got some announcements that will be very visible as you enter the state of Wisconsin from Illinois," said Walker, who did a series of radio and TV interviews in Chicago Wednesday touting Wisconsin's changing business climate.
The governor has not said how much the campaign will cost, or what it will entail. But he was confident his efforts, combined with the changes in Illinois, will cause businesses to consider relocating — even if Wisconsin's tax rate remains the higher of the two.
Businesses "make an assessment not just on where things are, but where they are headed," Walker said.
The Illinois bill would increase individual income taxes from 3 percent to 5 percent, and corporate taxes from 4.8 percent to 7 percent. That still compares favorably to Wisconsin's individual income tax rate, which ranges from 4.6 percent to 7.75 percent, and a corporate tax rate of 7.9 percent.
Walker has introduced three bills aimed at spurring business growth. They would give a sizable tax credit to small businesses grossing under $500,000 a year, increase by $25 million the amount state officials can use to promote economic development and forgive taxes for two years on businesses that move to Wisconsin.
The governor said Wednesday he will make property tax relief a "hallmark" of his first budget, and he expected to work on lowering income taxes in coming years — all of which Walker said would make Wisconsin more inviting to new businesses.
Taxes not only factor
Whether the new marketing campaign will actually help the governor fulfill his promise of adding 250,000 jobs to the state by 2014 is open for debate.
"This game has been played before and there have been no substantive successes from it," said Zach Brandon, former deputy secretary of commerce and current Dane County executive candidate, said of cross-border raids.
Taxes are just one of the factors considered when businesses relocate, he said, adding that access to customers and a supply chain, a well-trained workforce, a good infrastructure and transportation all play a part.
"If it were just about taxes, every business would move to West Virginia," he said.
But Republican legislators were enthusiastic about the plan. Senate Majority Leader Scott Fitzgerald, R-Juneau, issued his own open letter to Illinois businesses following the governor's announcement.
"Here in Wisconsin you will find a legislature that is willing to work with you and a workforce that is skilled and anxiously waiting," he wrote.
State Journal reporter Mary Spicuzza contributed to this report.