Vonco Products LLC to move to Wisconsin from Illinois
Vonco is the second major packaging manufacturer to leave Illinois in less than two weeks.
Yet another packaging manufacturer is leaving Illinois for Wisconsin. Vonco Products LLC announced plans Oct. 27 to move its entire operation from Lake Villa, Ill., to Salem,Wis., according to the Milwaukee Business Journal.
Salem is in Kenosha County, only 10 miles away from Lake Villa. It’s a 20-minute car ride, depending on traffic.
Vonco aims to have the transfer complete by June 2017. The new plant will be 86,500 square feet and employ 86 people, including those from the Lake Villa facility. The Kenosha Area Business Alliance, or KABA, offered to build the new plant at a cost $6.8 million. The multi-million dollar plant is going to be constructed in the 80-acre Salem Business Park Kaba is developing in the hopes of attracting businesses and especially manufacturers, according to Crain’s Chicago Business.
Vonco also had help from the Wisconsin Economic Development Corporation, or WEDC, which offered Vonco $500,000 in tax credits, contingent upon hitting job creation goals, the Milwaukee Business Journal reports. Combined with other tax credits and loans, the total amount state and local officials in Wisconsin offered to Vonco Products LLC was $1 million, according to Crain’s Chicago Business.
“The deal just was extremely good,” Vonco President Keith Smith said in a statement.
This “extremely good deal” was not just the product of local tax giveaways, but also because of Wisconsin’s manufacturing and agriculture tax credit, along with significant tax and regulatory differences between the two states. Wisconsin manufacturers pay no state income taxes because of Wisconsin’s income-tax credit for farms and factories, which eliminates their state income tax liability. This creates a stark tax difference for manufacturers choosing between Illinois and Wisconsin, just like it creates a difference for Illinoisans who are attracted to the zero-income-tax status of states like Texas and Florida. Though Wisconsin’s tax carve-out is not fair tax policy (it benefits manufacturers by making other sectors pay more), it shows the importance of tax differences for businesses and investors.
However, Illinois still has significant problems that make it an unattractive state for manufacturing. High property taxes, an expensive workers’ compensation system, costly layers of government and the lack of a statewide Right-to-Work law make Illinois uncompetitive for manufacturing and business.
The need for pro-growth and fair reforms is necessary to make Illinois viable for manufacturing, and it can be done without mimicking Wisconsin. Michigan passed Right-to-Work and tax reductions, and has over 600,000 manufacturing jobs, adding 170,000 jobs since the Great Recession and the restructuring of the auto industry. In Indiana, which also has low taxes and Right-to-Work, manufacturing workers are earning more than Illinois manufacturing workers when adjusted for taxes and cost of living.
Illinois has serious problems that call for real solutions. By sticking to fair reforms that attract, not bribe, manufacturers, the Land of Lincoln can rebuild its industrial sector and provide well-paying jobs for thousands.