The Wisconsin/Illinois Jobs Spat

Illinois Governor Pat Quinn is engaged in a jobs spat with Wisconsin Governor-Elect Scott Walker. Walker had questioned the wisdom of committing Wisconsin to additional “high speed rail” boondoogle spending (read why he’s right on the policy merits); Governor Quinn responded by trying to woo a Wisconsin-based rail firm to Illinois. Beyond targeted campaigns to win over one company or another...

Illinois Governor Pat Quinn is engaged in a jobs spat with Wisconsin Governor-Elect Scott Walker.

Walker had questioned the wisdom of committing Wisconsin to additional “high speed rail” boondoogle spending (read why he’s right on the policy merits); Governor Quinn responded by trying to woo a Wisconsin-based rail firm to Illinois.

Beyond targeted campaigns to win over one company or another with special perks (which is usually bad tax policy), which state scores higher marks on economic competitiveness? ALEC ranksWisconsin’s economic outlook at 23, while we’re 47.

A friend involved in Wisconsin politics and policy sent me the following email over the weekend:

It is true that Scott Walker is beginning to forge a campaign to woo Illinois businesses if an income tax increase is passed. Things to keep in mind:

1. Wisconsin does not impose a separate franchise tax on businesses. Wisconsin has a flat corporate tax rate of 7.9 percent. What is different from Illinois is that Wisconsin does not charge a personal property replacement tax for S-Corporations and LLCs/Partnerships. Also, S-Corporations have always been exempted from corporate taxes. During the campaign, Walker promised to phase out the corporate income tax to zero.
2. Wisconsin has robust tort reform for health care providers with strict caps on non-economic damages. Friends I know who live in Lake County have told me that if they want to see a good doctor, they have to go to Racine or Kenosha.
3. Wisconsin has some of the lowest sales taxes in the nation. The base is 5 percent while counties have anywhere up to an additional percent sales tax. Where I live in Milwaukee, the sales tax is 5.6 percent.
4. Wisconsin requires workers’ comp for businesses of 3 or more employees. However, Wisconsin allows for injured employees to choose the treating doctor like Illinois and a statutory 3 day wait period. However, Wisconsin has a less retroactive period for benefits (14 days for Illinois compared to Wisconsin’s 7 days), and Wisconsin bases benefits on impairment and not disability.

Walker will have the numbers in the Legislature to get his agenda passed as he has GOP super-majorities in the state House and Senate. Walker is calling the Legislature into emergency session on jobs to repeal the corporate combined reporting tax and pass pro-business policies.

Illinois needs to be especially careful about how our policy decisions affect the state’s relative competitiveness to neighbors. According to the Tax Foundation’s 2011 State Business Tax Climate Index, our corporate tax index ranking is 27 — Wisconsin is just two slots behind at 29.

Hot on our heels, wouldn’t you say?