Watch out, Illinois: New Jersey wants your businesses.
It is a time-honored tradition for mayors and governors of neighboring cities and states to compete for large corporations with tax breaks and other incentives. And so it was no surprise that the steep new tax increases approved this week by the governor of Illinois inspired the kind of trash talking heard more often from athletes than from state chief executives.
"Escape to Wisconsin," chortled Scott Walker, the state's Republican governor. Mitch Daniels, the Republican who runs Indiana, compared Illinois to the Simpsons - "you know, the dysfunctional family down the block?"
But New Jersey? Trenton is about 900 miles from Springfield, Ill. Jersey City is a 13-hour drive from Chicago. None of that deterred Gov. Chris Christie, a New Jersey Republican who spent much of last fall stumping around the country, from speaking up even before Gov. Patrick J. Quinn of Illinois, a Democrat, had signed the legislation.
"I'm going to Illinois," Mr. Christie said in an interview on Wednesday. "I mean soon. I'm going to Illinois, personally, and going to start talking to businesses in Illinois and get them to come to New Jersey."
In response to this story, Governor Quinn basically said: Good luck with that, and for good reason.
This will be a harder task than Christie would like it to be. Even if you taking into account the new higher tax rates in Illinois, the taxes in New Jersey still won't be lower than the taxes in Illinois, overall.
Also, the tax climate in New Jersey is so bad that it was ranked #48 in a list of the best states for businesses, when it comes to taxes. In this list that was put together by the Tax Foundation, Illinois would have dropped from #23 to #36, if the list was published today with the new tax rates. This is a huge drop, but it is still better than New Jersey.
Governor Christie knows that it will very much be an uphill climb, but he said that he has something that Gov. Quinn can't replicate:
Mr. Christie acknowledged that over all, taxes remain higher in New Jersey, but he said he could offer something more valuable, certainty.
“The pitch I’m going to make to businesses in Illinois is, ‘With Pat Quinn as your governor and this Democratic Legislature, you can guarantee this is just the beginning,’ ” Mr. Christie said. “As long as I’m governor, you’re not going to see that happen.”
I don't know how much "certainty" that Christie can give them. It is not a "certainty" that he'll be re-elected in the next election, and the next governor could be very different. Plus, the tax hikes in Illinois are "temporary" and are set to expire in four years. So, some CEOs may be worried that, if they make the move, all of the promises that Christie may make now may be broken by the next governor at the same time that the taxes are set to go back down in Illinois.
However, he is a very smart, charismatic man, and if anyone can entice companies to move there, it's him. It'll be interesting to see what companies that he will go after and if he is able convince them to make the move. The economy in New Jersey needs him to convince at least some new businesses to come to the Garden State, so that their economy will have a better chance to recover and grow.