From California to Maine, states across the country are grappling with the effects of the economic downturn. Costs are rising, tax revenues are decreasing and efforts to bridge budget deficits are meeting resistance from all sides.

In the face of these challenges, states are offering a variety of responses. Illinois, for example, recently gained unwanted national attention for its decision to raise income tax rates by 66% and business tax rates by 46%. The response from our neighbors was swift and pointed. Governor Scott Walker of Wisconsin immediately invoked an old tourism slogan, "Escape to Wisconsin," encouraging companies to move north of the Illinois border. Likewise, the Indiana Economic Development Corp. launched its "Illinnoyed by Higher Taxes" initiative to lure businesses and residents across the state line.

The tug-of-war between Illinois and its neighbors also highlights some very real questions facing the business community in the Midwest and beyond. How do you weigh the mix of incentives and disincentives offered by various states? How do you determine when it's time to pack up and move your company? Beyond the hard numbers, what do you owe your employees and the communities where they work and live? How do you balance your right to make a profit—and the resulting benefits to you, your shareholders and your workforce—with your desire to reward employee loyalty (and to remain loyal to the place you've called home for years)?

These are difficult decisions—not to be made lightly. Which is why they should be discussed: in boardrooms, in meetings with employees and, among you and your fellow readers. If you have a comment on this subject please click here: