Indiana courts businesses turned off by Illinois tax hike

It could be their Hoosier neighbor with an offer.

The Indiana Economic Development Corp. is launching an aggressive marketing campaign to lure companies and employers from the Land of Lincoln across the state line. Along with knocking on doors, the project will include e-mails, billboards and print advertisements to businesses and residents primarily in Chicago and the south suburbs.

"We never celebrate anyone else's bad decisions, but bad decisions like this call for reaction on our part," said Mitch Roob, chief executive officer of the IEDC.

Early Wednesday, the Illinois legislature approved a bill that raised the personal income tax rate by 67 percent and the business income tax rate by 46 percent, the Chicago Tribune reported. The measure passed in both chambers without any Republican support.

Democrats contended the state's budget crisis is so severe, cutting spending alone will not solve the revenue shortfall. However, Republicans argued the government should make stringent budget cuts before seeking a massive income tax hike when the economy is still struggling, according to the Chicago Tribune.

Speaking on the Senate floor, state Sen. Kyle McCarter foreshadowed what bordering states, such as Indiana, are hoping businesses do.

"Here's an investment tip," McCarter said, "put a lot of money into moving vans."

The tax increase could bring an immediate benefit for Elkhart County. For about three months, state and local officials have been in discussions with an Illinois-based manufacturer that is choosing between its home state and Elkhart County for an expansion, Roob said.

As higher taxes loom, Elkhart County has a better chance of getting the company and the 500-plus jobs that come with it. A decision is expected in April or May, the IEDC chief said.

Indiana will not change its shtick when enticing Illinois business, Roob said. The Hoosier state will emphasize what is describes as a low tax rate, business-friendly climate, good work force and great infrastructure.

"We embrace any company that wants to move to Indiana, assuming they're creating a legal product," Roob said.

Still. businesses in Indiana are not unscathed by new taxes. Because of the deficit in the state's unemployment insurance fund, employers were hit with an additional $400 million in taxes Jan. 1.

Roob does not expect the unemployment tax hike will deter economic prospects. Several other states, including Illinois and Michigan, have insurance funds awash in red ink, which keeps Indiana on an even playing field instead of placing it at a disadvantage.

The IEDC has transferred a staff member into the role of "knocker on doors," Roob said, and is allocating part of its marketing budget to the Illinois area. Billboards and print ads are scheduled to start appearing in February.

Asked if the aggressive stance by Indiana could cause some type of backlash, Roob answered with a decisive "Nope." He said Wisconsin and Missouri will be doing the same thing, so Indiana should try to capitalize on the situation.

"When you do something stupid," he said of Illinois' move to raise taxes, "there are consequences."