Illinois raised its state income taxes...

...this week to five percent for individuals and 9.5 percent for businesses. In response, the governors of Wisconsin and Indiana urged Illinois businesses to relocate to their states. (Given that the Tax Foundation ranked Wisconsin's tax environment even worse than Illinois', don't expect a mass migration over the Cheddar Curtain any time soon.)

But what I want to know is, do higher taxes really drive businesses out of a state?

It seems like New York, for example, is the home to hundreds of businesses, despite its last-place ranking in the survey. And Indiana, Illinois' immediate neighbor to the east, was ranked 10th in the nation in the same survey and has never been successful at recruiting businesses across the border. (In fact, while Northwest Indiana is only a short drive from Chicago's loop, its cities more resemble a war zone than some inviting entrepreneurial paradise.)

Could it be that other factors are just as important, such as proximity to a pool of talented individuals? Why else would so many financial firms locate in Manhattan, or high-tech start-ups in Silicon Valley? Maybe a state's income tax rate is just one factor among many.