* According to the AP, 107 companies will lose state tax breaks worth (on paper) over $100 million in the next three years. The tax breaks are handed out over time, so this isn’t a one-time budget hit. And, sometimes, companies don’t even use their credits because they haven’t followed through on their promises for one reason or another...
The companies that made deals that expire between 2012 and 2014 promised to keep more than 12,000 jobs in Illinois and create another more than 10,000 positions. In some cases, according to state records, those companies haven’t used the tax credits. Whitley and others said the most likely reasons are that the company didn’t add jobs as intended, or the company didn’t have profits to use the tax credit against.
Deals that expire next year include $34.7 million in tax breaks that J.P. Morgan Chase used after agreeing to keep 2,247 jobs at locations in Chicago, Elgin and Elk Grove Village, and $6.72 million in breaks provided to the Robert Bosch Tool Corp. after that company agreed not to move 444 jobs from a facility in Mount Prospect.
Deere & Company has used $7.28 million in tax credits as part of a deal expiring in 2013 that requires the company to keep 350 jobs in place and create 30 more at facilities in Moline, East Moline and Silvis.
In 2014, a deal with audio electronic maker Shure Inc. is set to expire. The company has cashed in $7.28 million in tax credits after agreeing to keep its headquarters and 570 jobs in state, in Niles, rather than look elsewhere. Also that year, a state deal with Abbot Laboratories to keep 260 jobs in Des Plaines and create another 50 expires.
* In related news, the Illinois Times has a story today about a group called Make Wall Street Pay Illinois…
MWSP points to a 49 percent surge in profit for Illinois-based companies during 2010, adding that the top five publicly traded corporations in the state made $19.7 billion in profit last year. That profit should translate to more revenue for the state, MWSP says, but that’s not likely.
The group points to a depreciation tax break for corporations that cost the state $600 million last year, saying Illinois needs to decouple from similar federal tax breaks that cost the state money.
“Large corporations in Illinois are raking in massive profits while the state struggles to make ends meet,” MWSP says, explaining that a temporary federal tax break for businesses in 2012 means companies can depreciate capital expenditures all at once instead of parceling them out over time. That will cost Illinois an estimated $600 million because the state’s corporate income tax is based on how much federal tax a corporation pays.
MWSP also claims that two large national banks operating in Illinois have greatly reduced their loans to small businesses, hampering business development. From 2007 to 2010, Bank of America reduced small business loans in Illinois by 97 percent, while JP Morgan Chase reduced the same loans by 70 percent, according to data from the U.S. Small Business Administration, which tracks the loans. MWSP says that decline has had “a dramatic effect on unemployment in Illinois,” citing the loss of 371,000 jobs in Illinois since 2008.
* MWSP’s state legislative agenda didn’t go so well this spring…
House Bill 1109, which would allow municipal governments to put liens on vacant properties owned by banks for failure to maintain the properties, died in committee. House Bill 1810 would have allowed the state to charge banks a $500 fee for each home foreclosure to go toward foreclosure counseling, but that bill also died in committee. The General Assembly did create a Foreclosure Prevention Program Fund to be supported by revenues from a major gambling expansion.
Thoughts?
- david starrett - Thursday, Jun 16, 11 @ 12:39 pm:
Actually, HB1109 was voted out of the House’s Housing Committee on a partisan roll and was then held on 2d Reading. A re-worked version of it was amended onto SB16. Tat amendment also passed the same committee on a partisan roll, but included changes sufficient to make the Realtors neutral.
Everyone else is in support except, of course, the bankers. So far, their opposition has been enough to prevent a 3d Reading vote in the House.
- Yellow Dog Democrat - Thursday, Jun 16, 11 @ 1:01 pm:
I feel like singing “Its a Hard Knock Life.”
- Cincinnatus - Thursday, Jun 16, 11 @ 1:05 pm:
This is what happens when you have government picking winners and losers. More businesses (and resultant employees) would be much better off if a level playing field was offered to them, and no breaks or subsidies are granted by the government.
- Liberty First - Thursday, Jun 16, 11 @ 1:05 pm:
The problem is the state just can’t manage the redistribution of wealth any better than they can manage the state insurance program.
- just sayin' - Thursday, Jun 16, 11 @ 1:08 pm:
Apropos of nothing, Weiner’s having his press conference any minute to annouce resignation.
- Cincinnatus - Thursday, Jun 16, 11 @ 1:11 pm:
just saying’,
Schadenfreude and hubris all wrapped up in one place!
- Team Sleep - Thursday, Jun 16, 11 @ 1:20 pm:
I agree with MWSP’s points on the lack of proactivity by the largest banks who received TARP money and who often receive nice tax and business incentives. However, the flipside to that coin is that, until this past session, Illinois has done very little over the past several years to drastically cut the budget. It’s a two-way street. I never thought I would say this, but thank God the spending caps put in place weren’t higher - because Quinn’s idea of “radical” and “austere” would be to never make cuts.
- Just the Facts - Thursday, Jun 16, 11 @ 1:54 pm:
It’s good to see that there is now an organization on the other end of the spectrum to balance out the Illinois Policy Institute. My response to the recommendations from the report:
“Pass HB 1810 the proposed $500 fee on banks for foreclosing on homeowners. This would
fund mediation programs that would allow homeowners to modify their loans, stabilize
communities and put millions of dollars into our state budget.” The federal mortgage modification programs have been so sucessful (not). Let’s mandate a state level “mediation” process to slow down the process even further. What it would do is increase the cost of doing business for the banks which would have an impact on the interest rates the banks would charge borrowers to obtain mortgage loans.
“Pass HB 1109 to allow communities to charge fines and fees on property that is
abandoned because banks have initiative foreclosure but not taken legal possession.
These fees can be used to keep up property, reduce crime, stabilize home values, return
property taxes to local communities and boost the Illinois economy.” If the banks don’t have possession, I assume these “fines and fees” will be imposed on the owners of record of the properties - the persons who can’t pay the mortgages. Also, how the term “abandoned” will be defined will be something to be litigated. To the extent imposed, these things will end up as a lien on the property and won’t be collected until the property is sold post-foreclosure. Hence, it will cost more to purchase a property out of foreclosure because these things will hav. It won’t hurt the banks, or help anyone in particular for that matter.
“Decouple Illinois from the federal bonus depreciation tax break. The state of Illinois
cannot afford to lose $600 million in revenue in this time of crisis.” This is a timing issue. If the property is expensed in the year of acquisition, it lowers income in that one year. If the state were to decouple, the property would be depreciated and income would be reduced over the depreciable life of the asset. The Quinn administration knew the impact of this change in federal law. However, they never introduced legislation to decouple or, apparently any serious attempts to get this amended onto any other tax legislation. Illinois decoupled from prior federal bonus depreciation post-9/11/01 - during a Republican administration I might add.
“Hold hearings on toxic “Interest Rate Swaps” that gouge the state and our cities &
towns. These rip offs cost the Illinois budget $88 million per year and our cities and
towns millions more.” State level hearings won’t accomplish anything other than giving organizations like MWSP an opportunity to obtain publicity. If there is anything illegal here, either the Attorney General or the feds should be doing something with this issue.
- wordslinger - Thursday, Jun 16, 11 @ 2:45 pm:
–MWSP points to a 49 percent surge in profit for Illinois-based companies during 2010, adding that the top five publicly traded corporations in the state made $19.7 billion in profit last year.–
That can’t be right. The WSJ, the Trib, Mark Kirk and GOP governors of other states tell us that Illinois has a terrible business climate and they’re all just waiting for more trucks to move out.
- Pat Robertson - Thursday, Jun 16, 11 @ 3:26 pm:
==That can’t be right.==
Nothing says those companies are earning their income in Illinois. Boeing is a great example of a company headquartered here that doesn’t do much of its business here.
- Loop Lady - Thursday, Jun 16, 11 @ 4:14 pm:
sure, I say bully for the common folk…go get ‘em…no one in Washington or Springfield wants to upset the apple cart…
- USA Patriot - Thursday, Jun 16, 11 @ 4:24 pm:
Large businesses just are not putting in their fair share. We just can’t deal with more and more cuts - the most recent round have had a huge impact on the people and organizations that I know.
- wordslinger - Thursday, Jun 16, 11 @ 6:29 pm:
–Nothing says those companies are earning their income in Illinois. Boeing is a great example of a company headquartered here that doesn’t do much of its business here.–
I’m not even sure what that’s supposed to mean, in a global capitalist economy. The whole purpose the exercise is to sell everywhere, isn’t it?
Here’s a list of Illinois’ largest publicly traded companies. I doubt if the state corporate income tax rattles many of them, since it’s only on Illinois sales.
- Pat Robertson - Thursday, Jun 16, 11 @ 7:04 pm:
It means that the fact that an Illinois-based company is experiencing huge growth in income reported on its financial statements can be perfectly consistent with Illinois having a lousy business climate. Financial statement income is worldwide. The company could be shrinking in Illinois while growing like crazy everywhere else.
- wordslinger - Thursday, Jun 16, 11 @ 8:05 pm:
Here’s the list, anyway, my mistake earlier.
http://www.chicagotraveler.com/chicago-companies.htm
Pat, I don’t think you can have it both ways — everything is lousy but Illinois corporations are making tons of money. Take a look at the list — the great majority of those companies make most of their sales outside of Illinois. That’s a bad thing? And they’re paying chi-chi beans in state corporate income tax, too.
They’re supposed to making money elsewhere, right? Otherwise, we’d just be bartering eggs for piano lessons amongst ourselves.
My main point is that Illinois is no Utopia, but no place is — and it’s not as bad here as the Chicken Littles would lead you to believe. The recent hysteria — whether in the public debt and private sectors — doesn’t fly when you consider the facts.
You don’t have to wander too much in the Chicago metro to encounter a lot of folks who have voted with their feet and are clearly recent arrivals, betting their capital and labor here.
Rural Illinois, and rural America, are a different story and don’t get nearly the attention that they deserve. The whining in the cities, suburbs and corporate boardrooms drowns them out.
- 4 percent - Thursday, Jun 16, 11 @ 9:43 pm:
While a 49 percent increase may sound big in one year, a more accurate picture would show their increase/decrease in the last few years.
A company whose income dropped by 50 percent would mean they are back at the starting point.