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While he's doing that buisness and industry will relocate to states that are encouraging economic growth by limiting regulation and reducing corporate taxes. Those states typically are also "right to work states" where unions have considerable less political clout (Florida, Texas for example).
I think you will see a mass exodus similar to what's happened in California, New York, and Michigan.
Don't want to get off the subject of our buddy Rahm, but what you are describing is exactly how The Fair Tax would help all of the USA, because every company would have a lower tax rate and would be able to expand and hire more workers.