* The latest rant from the Tribune editorial board…
More broadly, this state has to revamp a tax policy that gives all employers incentive to leave the state, but tries to lure select employers to stay. The state imposed a whopping increase in personal and corporate income taxes early this year. Yet, as the Tribune reported Friday, since Gov. Pat Quinn took office he has pledged at least $636.5 million in tax credits, grants and training funds to companies to hire or to keep jobs in the state.
“All employers”? Really? How is the Tribune gonna leave? And when?
Snark aside, the story about the total incentives follows the usual pattern of focusing on the largest possible number. That $636.5 million is spread out over at least ten years, so the fiscal impact each year is minimal. And the Trib buried this valuable nugget deep inside the piece…
[Greg LeRoy, executive director of Good Jobs First, a nonprofit that researches economic development subsidies] said he was pleasantly surprised by the cost per job on the 2011 packages. Many states, he said, offer more than $100,000 per job. A company in upstate New York, he added, got a package worth $1 million per job.
So, we have reasonable incentives? Really? Huh. That doesn’t jibe with the common refrain of “We’re so screwed up we have to offer huge bribes to keep businesses here.”
No Illinois incentive comes even close to the $100,000 per job that “many states” offer. And keep in mind that even that $100,000 is spread out over many years. The highest per-job incentive Illinois offered was spread out over 13 years…
The state pledged nearly $61,000 for each of the 70 jobs Evraz Inc. North America promised to create in Chicago. That figure includes $4.2 million in tax credits the company can claim over the next 13 years and $50,000 in training funds.
And it’s not actually $61,000 per job because instead of 70 jobs, the company already has 100 employees in Chicago. And many of these jobs are high-paying executive positions.
We should definitely keep a watchful eye on these incentive programs, but let’s also put the annual cost in perspective.
…Adding… From our always valuable commenter Wordslinger…
–More broadly, this state has to revamp a tax policy that gives all employers incentive to leave the state, but tries to lure select employers to stay.–
More than 60% of Illinois corporations don’t pay any state income tax. That would seem to be a marketing tool to attract business, not a reason to leave.
* Meanwhile, speaking of taxes, I told subscribers about this deal on Friday morning…
House Democrats on Sunday offered a scaled-back, $250 million-a-year, tax-break package designed to keep Chicago’s two financial exchanges and Sears Holdings Corp. from moving out of Illinois.
The package would provide approximately $100 million in combined tax relief annually for CME Group Inc., which owns the Board of Trade and the Chicago Mercantile Exchange; and Sears Holdings Corp. It also proposes new tax credits for Chicago’s theater scene.
The 220-page amendment filed Sunday by Rep. John Bradley (D-Marion) has been tweaked so there will be a continuing source of revenue unlike earlier versions where taxpayers eventually would have been on the hook.
“The biggest change is we can now actually pay for this,” Bradley told the Chicago Sun-Times.
* The funding mechanism…
The cost would be completely offset by a resurgence in state corporate income tax receipts that is expected with the expiration of a [federal] tax break that allows businesses to accelerate their deductions for capital investments through 2012, Bradley said.
The new package, like the earlier one, would reinstate companies’ abilities to use past net operating losses to offset corporate income tax liabilities, but only up to $100,000 a year. That tax break has been temporarily suspended to help ease the state’s budget crisis.
The estate tax deduction would rise from $2 million to $3.5 million over two years, rather than to $5 million, as had been proposed earlier.
The earned income tax credit for low- and middle-income families would rise from 5 percent to about 7.5 percent, rather than the 15 percent put forward earlier.
Personal income tax exemptions would be adjusted upward for inflation in fiscal 2013 only, but an earlier proposal to index the exemptions to inflation longer-term was dropped, Bradley said.
* But, there are problems…
Leaders of Community Unit District 300 in Carpentersville have come out strong against the new plan to give Sears Holdings Corp. tax breaks, saying it goes against a tentative agreement reached two weeks ago.
“The rug has once again been pulled out from under 21,000 students at the last minute,” Superintendent Michael Bregy said in a statement late Sunday night. “We were so close to feeling that democracy still had a home in Illinois, and now we’re back to square one.”
How that will play out in Springfield will become clear this afternoon, when a House committee is scheduled to have the first public hearing on the new proposal.
* And the chief sponsor of the underlying legislation is, as always, pessimistic and unenthusiastic…
The chief sponsor of the measure, House Majority Leader Barbara Flynn Currie, D-Chicago, told me on Sunday that she doesn’t yet know what’s in the deal and cautioned that it still may be too fat for the cash-strapped state.
“It sounds somewhat stripped down, but I don’t know how much stripped down,” she said. “I think that (the bill as first proposed) is a little top-heavy.”
“A lot of pressure” is coming from Mayor Rahm Emanuel and Gov. Pat Quinn to save the exchanges, Ms. Currie said. If the Legislature goes along, it “makes sense” to also help working people with a companion increase in the state’s earned-income tax credit, rather than just enacting “corporate welfare.”
The deal — if there is one — will be filed as an amendment shortly before the committee’s scheduled 1 p.m. meeting, Ms. Currie said. Asked if the votes are there for the House and the Senate to pass something when they convene for a one-day session Tuesday, she replied, “I don’t know.”
The full legislation is here.