Kimberly-Clark executives were fed up with Wisconsin’s business climate, red tape and high tax burden. Over time, the added expense of operating the company in its home state became less justifiable.
Kimberly-Clark’s decision to move sparked a near tax revolt in this state, ushering in a generation of lawmakers and a Governor dedicated to cutting taxes.
This wakeup call protected Wisconsin’s manufacturing economy.
Today, Wisconsin is getting another wakeup call reminding us that high taxes cost jobs and quash innovation.
Waukesha-based RedPrairie Corp., a world leader in supply chain management software, is sounding the alarm that they might be able do better by their shareholders by moving out of Wisconsin. At the top of RedPrairie’s gripes: high taxes impede their ability to attract top-shelf executives they need to run their expanding business. If RedPrairie leaves, the state stands to lose 200 high-wage jobs.
John Jazwiec, RedPrarie chief executive, cited Wisconsin’s business environment and high tax burden as key to the company’s decision to look to other states. He said it’s the “5,000-pound elephant in the room” when it comes to operating a business.
And, it’s not just in Waukesha County.
Manitowoc County lost 300 high-paying manufacturing jobs when LoPresti Aviation, an airplane manufacturer, announced Wisconsin is out of the running for a new plant. The reason: high taxes and less-than-friendly business environment.
“There is a snowball’s chance in a Wisconsin summer of it landing here,” LoPresti business development manager Todd Lohenry said.
The wakeup call is being sounded - again.
The question for Wisconsin is: Will elected officials awaken, or hit the snooze button and roll over as jobs leave our state?
Wisconsin has the sixth-highest state and local taxes in the nation. That burden is a significant drain on the economy, and makes our goods and services more expensive. Cutting taxes has been the business community’s top public policy concern for many years.
There have been modest victories over the past 20 years in the struggle to lower our tax burden - local spending caps, temporary tax freezes, and single sales factor apportionment for corporate income taxes. Small victories - but we’re losing the war.
A strong Taxpayer Protection Amendment, constitutionally limiting increases in state and local taxes, would be of major benefit. Milwaukee County’s proposed seven-county sales tax increase and the Milwaukee Area Technical College’s recent levy hikes are just the most recent examples of governments that feel they cannot live within their means.
While tax limits will help, holding the line on taxes may not be enough to position Wisconsin as a leader in innovation and job creation. Wisconsin must not only protect its manufacturing base, but also open doors to the new “information” economy. The time for bold action is now. Wisconsin needs to send a message to the world that it wants businesses to grow.
About 10 years ago, Ireland significantly cut its corporate income tax and restructured its tax system. The Irish told the world investment in their nation would not be penalized with high taxes. The world responded. Nearly a quarter of U.S. investment in the European Union is now in Ireland.
We must think out of the box and take bold steps. Wisconsin should strongly consider:
- Eliminating the corporate income tax -- That’s right, not reducing it, not providing more credits, getting rid of it altogether. Not only would this send a message that Wisconsin is serious about attracting employers, but it would help Wisconsin exporters deal with WTO regulations that favor nations with no or lower corporate income taxes.
- Cutting individual income taxes, especially the top rate -- Reducing taxes make jobs in Wisconsin more attractive to the “creative” or “innovative” class. Bike trails and fun entertainment are nice, but companies need to be able to provide competitive salaries and high income taxes make that difficult.
- Eliminating the personal property tax -- The personal property tax directly discourages capital investment by businesses. Wisconsincould significantly improve its business climate by eliminating the last remaining business equipment property taxes, the only personal property tax allowed.
Critics will ask how Wisconsin can “afford” significant business tax cuts. However, if Wisconsin does not respond to the clarion call of companies like RedPrairie and LoPresti, will we be prepared to watch them leave if they call our bluff?
We can’t afford to hit the snooze button.
About the Author
