* Since many corporations pay little to no state taxes, a growing number are asking for EDGE credits, which allows the companies to pocket state withholding taxes. But that requires legislation for each deal, and that means legislators are put on the spot. So, at least one state legislator thinks the executive branch ought to be given the authority…
Sen. Thomas Cullerton, a Democrat from Villa Park, said the process needs to be made “more palatable” for corporations by ending the practice of executives publicly testifying on why they need the money. One possibility might be to give the department the authority to decide which companies can keep employee taxes if the companies have little or no state tax liability.
Chris Mooney, director of the Institute of Government and Public Affairs at the University of Illinois, said “corporate big shots” are not used to being peppered with questions when seeking tax breaks. “They are not happy about that,” Mooney said. “It’s sort of embarrassing for them.”
* The problem with Sen. Cullerton’s idea is the state’s economic development agency loves EDGE credits, while another agency says there’s no proof that they work overall…
“We have calculated that EDGE, over its history, has produced $8 in private investment for every $1 in credit,” [Dave Roeder, a spokesman with the Department of Commerce] said.
The state has pledged nearly $800 million in EDGE incentives since it was created in 1999.
A 2009 report by the Department of Revenue found that there is no reliable way to measure the impact of the tax incentives program on employment because it is unclear what the net effect of favoring certain firms and industries over others has been on the longer-term employment prospects of Illinois.
What do you think?
- Will - Monday, Dec 9, 13 @ 10:42 am:
There’s certainly no way that could lead to future gubernatorial corruption trials. It’s F*ing golden.
- Mighty M. Mouse - Monday, Dec 9, 13 @ 10:43 am:
If the Department of Revenue said so as recently as 2009, they’re probably right.
- iThink - Monday, Dec 9, 13 @ 10:45 am:
I am not a fan of the .gov picking winners through tax breaks (with some select exceptions).
If there is a problem with the taxation rate on business fix it for all of them, not just those big enough to want the state to pay for their inconvenient social calenders (looking at you ADM).
On the subject at hand, no if your going to give EDGE credits - make those CEOs earn it publicly. If they don’t want the public to know, then maybe their reasons aren’t worth it.
- Concerned Voter - Monday, Dec 9, 13 @ 10:53 am:
So Cullerton and co. made the “hard decision” to change the state employees pensions, now they want to make it even easier for to give away state money that we don’t seem to have when they talk about pensions. Please.
I’d love for the department of Rev to do a study and see what kind of changes there are in a company’s profits before and after they get these “incentives”. My guess is that the return, if any, is nowhere near the 8 to 1 listed by Dept. of Commerce.
- BMAN - Monday, Dec 9, 13 @ 10:54 am:
Boo hoo, the corporate fat cats have to answer embarassing questions! Eight dollars of investment for each dollar of credit, what brillant accountant figured that out. As for edge credits, what makes theses corporations think they should have these entiltlements? If you want to make money you need to spend a little money. Edge credits are a bunch of BS.
- Ahoy! - Monday, Dec 9, 13 @ 10:57 am:
It’s a good idea to have it formula driven (approved by the legislature) and allow the department to approve the tax credit based upon the approved formula.
The formula should be based on jobs created (or retained) and capital investment. Sometimes incentives will need to come to the legislature, especially in the case of very large and complex projects.
While the incentives will help with the large corporate headquarters and large scale projects, the state should really focus on decreasing fixed businesses costs for all businesses. Lowering workers comp and Unemployment Insurance costs would help all businesses and lead job creation, far more than EDGE.
- Obamas Puppy - Monday, Dec 9, 13 @ 10:57 am:
If corporations are people too, then I should get to keep my Illinois income tax payment.
- Shark Sandwich - Monday, Dec 9, 13 @ 11:01 am:
We should hand over public assistance to the governor for exec orders, too. After all, people shouldn’t have to answer embarassing questions about why they need tax dollars
…
- wordslinger - Monday, Dec 9, 13 @ 11:04 am:
Absolutely not. The Illinois governor with sole power to grant corporate tax credits?
No temptation there. What could possibly go wrong?
If ADM, with it’s $81 billion in revenues and $2 billion in profits a year, wants $2 million a year in tax credits for beer money, let them beg for it.
I’d be embarrassed by the spectacle, too.
For crying out loud, when are small business groups going to start screaming bloody murder about this stuff? They’re the ones paying the freight on the corporate income tax.
- walkinfool - Monday, Dec 9, 13 @ 11:06 am:
There should be clear goals, metrics, and rules set by the legislature, and then executive power to implement the program for any specific deal. That is how our government best works. Exceptions to the process and rules should be treated as exceptions to the law, and extremely difficult to get.
The only reason local legislators want to get heavily involved in any specific deal, is to show their own districts that they are all about saving/growing jobs, while sometimes ignoring the needs of the state.
Weren’t we going to develop a plan to reform of DCEO this year?
- Bill White - Monday, Dec 9, 13 @ 11:10 am:
@Ahoy
Lowering workers comp insurance rates could be achieved by transferring workers comp medical pay into the ordinary health insurance pool and only allow medical pay reimbursement from the comp insurer if the employee somehow lacked health insurance.
Remove medical payments from the workers comp arena and those premiums would fall through the floor.
- iThink - Monday, Dec 9, 13 @ 11:14 am:
–So Cullerton and co. made the “hard decision” to change the state employees pensions–
Cullerton voted no on pensions.
- Jaded - Monday, Dec 9, 13 @ 11:21 am:
“Cullerton voted no on pensions.”
That was Tom Cullerton. John Cullerton, the Senate President, voted yes.
- Sir Reel - Monday, Dec 9, 13 @ 11:28 am:
All corporate incentives should be evaluated on the basis of revenue neutrality, not jobs or “investment.” Does $8 in investment produce $1 in tax revenue?
- Carl Nyberg - Monday, Dec 9, 13 @ 11:37 am:
Also, wasn’t the justification for having a “flat tax” in the Illinois Constitution was that it was “fair” b/c the graduated income tax invites deductions and loopholes?
Right now, Illinois has a graduated income tax. As you and your business get richer, you gradually pay a lower percentage of your income in taxes.
- walkinfool - Monday, Dec 9, 13 @ 11:50 am:
Carl Nyberg: Thanks for reminding us again that these corporate tax benefits go to the bigs, not the smalls, while the smalls produce the most employment and growth.
We have an upside-down graduated corporate income tax in Illinois.
- flea - Monday, Dec 9, 13 @ 12:17 pm:
If state agencies have to grovel for $ to keep the doors open, a little Q+A for anyone wanting to avail themselves of $ from state coffers (or tax breaks) should be in order.
- Tom Joad - Monday, Dec 9, 13 @ 12:22 pm:
it would seem that these large corporations are getting the advantage of tax breaks to the maximum they should be allowed already. There is no justification for the additional credits. When will they get enough of state welfare?
- pension solution - Monday, Dec 9, 13 @ 1:22 pm:
So….if we give 12.5 billion to these companies, we then solve the pension problem?!!
- Ruby - Monday, Dec 9, 13 @ 2:50 pm:
From the first sentence in the above article:
“Since many corporations pay little to no state taxes, a growing number are asking for EDGE credits, which allows the companies to pocket (their employees’) state withholding taxes.”
Why would not paying any corporate state taxes be a reason to collect and keep your employees’ state taxes? This makes no sense at all.
Perhaps Illinois is a little too business friendly, and this is the real cause of our current financial troubles.
A 2011 study by Ernst & Young found that when all state and local taxes are considered, Illinois has the fifth lowest effective tax rate — not just in the Midwest, but in the nation.
- Plutocrat03 - Monday, Dec 9, 13 @ 3:52 pm:
All profitable corporations need to pay something toward the infrastructure that benefits us all.
This new technique of siphoning away employee withholdings, which is supposed to fund other things is beyond idiotic.
If I have to pay my 5%, less deductions, the so should they.