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Border communities hoping for more Illinois business

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Kevin Hoffman
September 18, 2011
— If Illinois businesses accept Gov. Scott Walker's invitation to "escape to Wisconsin," local officials hope they'll flock across the border to communities affected most by the sagging economy.

While there hasn't yet been an influx of new business, community leaders say there are promising signs that help is on the way.


"Things in Illinois are not going very well right now," said Mike Van Den Bosch, executive director of the Walworth County Economic Development Alliance.


The Illinois Legislature in January approved steep tax hikes to battle the state's estimated $15 billion deficit. The individual income tax rate jumped from 3 percent to 5 percent and corporate income taxes grew from 7.3 percent to 9.5 percent.


Wisconsin's personal taxes remain higher, so officials don't expect Illinois residents to feel as much pain as businesses.


Illinois' corporate tax rate is now the fourth-highest in the United States, according to the Tax Foundation. A 2011 report ranking state business tax climates ranked Illinois only slightly better than Wisconsin, but residents here believe the scale is beginning to tip in Wisconsin's favor.


"Illinois has given up a comparative advantage," said David Rasmussen, attorney and village of Walworth president.


"It's economically illiterate to raise taxes and think people aren't going to move."


Wisconsin's taxes remain higher, but people such as Rasmussen believe the similarities in taxes will force businesses to look elsewhere for advantages.


Some businesses didn't wait long to make the jump. FatWallet.com, an Internet business that deals in consumer coupons, announced in April it would move eight miles from Rockton, Ill., to Beloit. The company's general manager said the Illinois affiliate nexus tax would have reduced its business up to 40 percent.


Rasmussen said the village of Walworth is close to luring another business from Illinois, but an official announcement won't come until the deal is complete. He said he believes more business leaders will cross the border, benefiting Rock and Walworth counties.


"I expected it," Rasmussen said. "That's a big increase in Illinois."


It's clear businesses are showing interest, but the looming question is whether more will defect to the north in hopes of expanding their operations. Indiana Gov. Mitch Daniels made his own pitch to Illinois businesses, touting the Hoosier state's tax climate, ranked significantly better than Wisconsin's.


Van Den Bosch said he spoke to a number of businesses outside Wisconsin considering moving to another state. Several were in Illinois.


The Illinois tax structure isn't what concerns businesses—it's the trend. Taxes might be similar to Wisconsin's, but the direction Illinois is headed is causing fear that things will only get worse.


Many businesses threatened to leave the state, but one thing Van Den Bosch believes Illinois has excelled at is its ability to change minds with incentives.


Wisconsin has its advantages too, he said. Walworth County has backing from UW-Whitewater, George Williams College and other institutions outside of the county. That gives the region an edge in professional development.


"Right now, the name of the game in business is ‘workforce,'" Van Den Bosch said.


The county economic development alliance maintains a partnership with higher education resources, aiding start-up businesses and those in need of counseling services. Whitewater's Innovation Center at the Whitewater University Technology Park is one example, allowing entrepreneurs to use UW-Whitewater's resources to grow their business.


Wisconsin communities don't charge as many fees to businesses, and property taxes also are a bit lower, Van Den Bosch said.


One factor that's holding businesses back is new construction. Companies considering a move are reluctant to invest in new buildings, and Van Den Bosch said there isn't much vacant industrial space in Walworth County.


The economic development alliance continues to work with businesses already in Walworth County in addition to attracting new ones. Van Den Bosch said the organization has several programs aimed at retention and growth.



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