Illinois’ ‘fair tax’ could be boon for Wisconsin

(The Center Square) – One of the most watched votes on Election Day in Wisconsin is not on the ballot in the state.

Voters in Illinois will decide on what proponents are calling a “fair tax” in that state. Illinois Gov. J.B. Pritzker is driving to change the state constitution and swap Illinois’ flat income tax rate for a progressive rate.

UW-Madison economics professor Noah Williams said on Twitter that an Illinois tax increase would be good for Wisconsin.

“[The] net outflow from Illinois to Wisconsin of people is about 9,000 per year for the last two years,” Williams tweeted based on U.S. Internal Revenue Service data. “[While] income is about $350 million per-year in AGI [adjusted gross income] for the last two years.”

Eric Bott, director of Americans for Prosperity in Wisconsin, said those numbers will jump if Illinois raises taxes again.

“It’s truly a laboratory of democracy in the upper Midwest,” Bott told The Center Square. “States that have enacted pro-growth like Wisconsin and Indiana have been booming. States like Illinois have dug the hole deeper for themselves. They have seen their property taxes increase, they have seen businesses flee to neighboring states, and frankly have seen people flee.”

Census Bureau numbers show Illinois lost nearly 169,000 people between 2010 and 2019. That’s the worst population loss in the country.

Bott said while Wisconsin stands to benefit from Illinois’ fiscal problems, he warns that Wisconsin must remember what put the state in the position to be an economic refuge in the first place.

“A decade ago, Illinois and Wisconsin were both in dire financial straits, and had tough choices before them,” Bott said. “Wisconsin, under Gov. Scott Walker, made the tough choices and advanced the budget reforms to put our state back on track. That made our economy roar. Illinois put off the tough choices and just made the hole deeper. Now they are faced with a monstrous budget deficit.”

Both Illinois and Wisconsin spend about $40 billion each year in their state budgets. But Wisconsin does not have a massive Medicaid expense, about 25% of Illinois budget, or the $8 billion pension payment this year alone, or Illinois’ $140 billion in public pension debt.

Illinois is also counting on a $5 billion federal bailout just to make it through the next year.

Wisconsin’s Democratic governor, Tony Evers, would like to raise taxes and expand Medicaid. He would also like to roll back former Gov. Walker’s signature budget reform, Act 10, which could open Wisconsin up to much higher property taxes.

Bott said that is why maintaining Wisconsin’s sound fiscal opposition to Illinois is critical.

“We have to hold firm against any attempts by Gov. Evers to undermine the pro-growth reforms of the Walker-era,” Bott said. “The legislature has done a fine job of that over the past two years. They built a wall and they kept firm. They maintained the amazing regulatory reforms, the tax reforms and cuts, they even advanced some additional tax relief for middle-income families.”

Bott said If Wisconsin can maintain a pro-growth environment, the state will be in good shape going forward.