Sunday, March 27, 2011

Low-Tax States Woo Caterpillar Exit From Illinois

In January, Illinois Governor Pat Quinn signed into law a significant income tax increase. Since then, according to a report by Kurt Erickson of - Wisconsin, Indiana and New Jersey have attempted to "poach companies" out of Illinois. But specifically, Caterpillar CEO Doug Oberhelman "said he's being actively courted to move (Caterpillar)". The Erickson report includes correspondence from the Governors of Texas, South Dakota and Nebraska.
"I stand ready to help convince you to relocate or expand in the fiscally conservative, low-tax Lone Star State," wrote Texas Gov. Rick Perry in a Jan. 24 letter.
CAT Tractor - photo by JAXPORT
Author and blogger John Lott writes: "Caterpillar is an Illinois institution. If the company leaves the state, it will be a big blow. It would be interesting to see how much increased tax revenue Illinois is actually going to get from this tax increase."

John is underestimating the impact. The tax increase is already a big blow. However, a Caterpillar move would likely trigger a devastating industrial exodus. Even before the latest tax hike, few right-minded manufacturing companies were seeking to locate in Illinois. If Caterpillar moves, the prospect of new manufacturing will completely dry up and the plants that are left will race for the exits - if they aren't already doing so.

This story appears to have been first published on the web site of a local Bloomington, IL newspaper -
Caterpillar CEO's letter talks of leaving Illinois
By Kurt Erickson

The chairman and CEO of Peoria-based Caterpillar Inc. is raising the specter of moving the heavy equipment maker out of Illinois.

In a letter sent March 21 to Gov. Pat Quinn, Caterpillar chief executive officer Doug Oberhelman said officials in at least four other states have approached the company about relocating since Illinois raised its income tax in January.

"I want to stay here. But as the leader of this business, I have to do what's right for Caterpillar when making decisions about where to invest," Oberhelman wrote in the letter obtained Friday by the Lee Enterprises Springfield bureau. "The direction that this state is headed in is not favorable to business and I'd like to work with you to change that."
Oberhelman said he's being actively courted to move.

"I have been called, 'cornered' in meetings and 'wined and dined' -- the heat is on," Oberhelman wrote. "Before, I never really considered living anywhere else and certainly never considered the possibility of Caterpillar relocating. But I have to admit, the policymakers in Springfield seem to make it harder by the day."

Cat spokesman Jim Dugan said the letter was designed to show Quinn that Oberhelman wants to be involved in finding solutions that benefit the company, which employs 23,000 people in Illinois.
The entire story is available at

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