Huge Illinois Tax Hike Could Mean Exodus To The North

Illinois lawmakers tackle state budget legislation while on the House floor during session at the Illinois State Capitol in Springfield, Ill., Tuesday, Jan. 11, 2011. (AP Photo/Seth Perlman)

That sucking sound you hear in Illinois might be jobs and moving vans leaving the state.

In the wee hours of Wednesday morning, Illinois lawmakers squeaked in a massive tax increase at the end of its session before a new legislature, that is unlikely to pass tax increases in a down economy, started Wednesday. Some lawmakers say the increase was desperately needed to balance the state's fledgling budget. Now both residents and business owners in the "Land of Lincoln" are threatening to move out.

But that's good news for Illinois' neighbors to the north in Wisconsin, and they are laying out the welcome mat.

"Wisconsin is open for business," newly elected Republican Governor Scott Walker said in a statement his office put out immediately after the Illinois vote. "In these challenging economic times while Illinois is raising taxes, we are lowering them."

In an interview with FOX News, a spirited Governor Walker said Illinois lawmakers just made it an easy choice for a business trying to decide where to grow. "It's clear that it provides a great contrast to employers making a decision on long term growth and where the future is best for their company."

Illinois' income tax just raised from three percent to five percent. Wisconsin has a sliding scale that runs from a low of 4.6 percent on lower incomes, to a high of 7.75 percent for incomes over $225,000. The governor promises those rates will not increase , though he says Illinois will have to keep raising its taxes just to keep up with its spending.

Walker says he's already been contacted by a couple of Illinois businesses, unhappy with the tax increase and looking to expand their companies up north.

But the battle between the two states may have less to do with taxes and a lot more to do with politics. Illinois' Governor Pat Quinn is a Democrat as is the assembly that passed the tax hike. But Republicans just took control of the Wisconsin legislature in the November election and Walker, says the focus is on "lowering taxes and costs."

Walker's instant statement on the Illinois tax hike reflects that.

"On my first day in office I called a special session of the legislature, not in order to raise taxes, but to open Wisconsin for business. Already the legislature is taking up bills to provide tax relief to small businesses, to create a job-friendly legal environment, to lessen the regulations that stifle growth and to expand tax credits for companies that relocate here and grow here."

Earlier this year, when Governor Walker turned down federal funding for a new high speed rail system, saying it would be too costly to the state, Illinois Governor Pat Quinn proudly announced "We'll take the money meant for them!"

Now it's payback time, Walker said. "Illinois lawmakers are having a tough time controlling their spending. I'll take their jobs!"