* And the bludgeoning begins…
Forget cheese curds along Interstate 94 or speed traps designed to nab Illinois vacationers on the way to the North Woods.
Wisconsin thinks it has a new strategy to make a buck off of Illinois thanks to Gov. Quinn and the state Legislature’s backing of a 46-percent increase in corporate income taxes.
New Wisconsin Gov. Scott Walker, a Republican, launched an unprecedented blitz of the Chicago media Wednesday to woo tax-weary Illinois businesses into the Dairy State with his vision of two years of tax-free existence there if they move.
“I pulled out an old bumper sticker from the ‘80s when Tommy Thompson was governor that said, ‘Escape to Wisconsin.’ That was the tourism campaign back then. But that’s a message we’re sending now to employers in Illinois,” Walker told the Chicago Sun-Times in a phone interview.
Yet, there was not one mention [There was a brief mention, at the very bottom] in the article of Wisconsin’s much higher personal income tax rate. Yes, it starts at 4.6 percent, but that’s for single people making less than $10,070 a year. Make more than that and it’s 6.15 percent, up to about $20K in income. From there it ranges between 6.5 percent and a whopping 7.75 percent. For a lot of business owners, the personal rate is more important than the corporate rate because they don’t pay much or any of the corporate tax.
Our new corporate rate will be lower - 7 percent vs. 7.9 percent - but we also have that 2.5-point personal property replacement tax, which puts us higher. Still, Wisconsin has a state property tax.
…Adding… A great quote from the IMA…
“Wisconsin is not the mecca where everybody is going to be running off to,” predicted Illinois Manufacturers’ Association President Greg Baise. “The last time I looked, their climate is a lot s——- than ours.”
* Missouri? Really? Not…
If Gov. Pat Quinn signs the bill as expected, “this plan will undermine the state’s ability to attract new investment and business development, in particular relative to its lower-tax neighbors like Indiana and Missouri,” said Tax Foundation Staff Economist Kail Padgitt.
If you make more than $9,000 a year in Missouri, your tax rate is 6 percent. Our corporate tax rate will be higher, but it already is if you include the replacement tax.
Indiana will have a lower state income tax than us, but its counties are allowed to impose their own income taxes, and some of them are as high as 3 percentage points. Its corporate rate is currently 8.5 percent, plus those local rates. We’re still competitive.
* And then there’s this…
And some observers say the virulent reaction in the business community is somewhat overblown.
Economic development consultant Robert Weissbourd, president of RW Ventures LLC, said companies do not look solely at tax costs but at whether they get value for the costs, in the form of good roads, good police protection, a well-trained work force and the like.
“Chicago has had quite an attractive tax value proposition and it can stand to raise it a little bit,” he said. “I don’t think this is a total killer.” Still, the government needs to address inefficiencies and fragmentation in the way the state markets itself, he said.
* Highly misleading…
For a senior citizen with a base income of $25,000, the annual bill would grow from $660 to $1,100.
If that senior is living on a pension, he or she will pay zero state income taxes, as always.
* The first year of the tax increase’s impact will be lessened by the feds…
For many middle-income Illinois taxpayers, the reductions from the federal payroll tax cut may balance out the costs of the state tax increase, resulting in little immediate impact on withholding from paychecks. But the goal of the payroll tax reduction was to increase take-home pay and stimulate consumer spending, a benefit that Illinois taxpayers may not share in.
There’s also this to consider: The payroll tax windfall expires after this year, so in 2012 it will no longer cushion the blow of the state tax hike. That increase is to remain in full force through 2014 and then ratchet down in stages over the next decade, dropping to 3.75 percent in 2015 and then 3.25 percent in 2025 — still higher than the current rate.
* Also, keep in mind that after the 2014 gubernatorial campaign, much of the rate hikes will sunset…
the current 4.8 percent corporate rate would go to 7 percent until 2015, when it would drop to 5.25 percent. And in 2025, it would return to the current 4.8 percent.
Some don’t believe it…
As for the belief that legislators will let stand a requirement to draw back the increase by 1 1/4 percent within five years, Ellis calls that “hogwash.”
“If this increase isn’t even covering the deficit, there’s no way they’re going to allow a decrease. When was the last time you remember legislators cutting taxes?”
The 1983 temporary income tax hike was allowed to sunset.
* Tribune: Here they are
* Cash-strapped taxpayers upset by decision to raise income tax
* Flider supports income tax increase during final day in office after campaigning against it
* Easier to tax than to cut
* Quinn vows quick signing of tax hike
* Budget bomb gets dropped in laps of taxpayers
* Residents say they will cope with income tax increase by cutting fun
* Tax hike is betrayal of taxpayers
* Central Illinois debates rising Illinois income tax
* Blaser: What’s with this tax hike?
* Tax hike concerns business owners
* Brown: Legislature not for the fainthearted
* State lawmakers cling to party lines in tax vote