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Edge or thrive?

Friday, Mar 17, 2017

* The state’s EDGE tax credit program for expanding or relocating businesses is expiring at the end of April, so some replacements are being mulled. Here’s Greg Hinz

One measure pushed by the Illinois Chamber of Commerce would both rein in and expand the program.

Sponsored by Rep. Michael Zalewski, D-Chicago, the measure would cap credits at $50 million a year statewide and limit them to five years for any given project, down from 10 years now.

But instead of employers negotiating a cut in their income-tax liability, they’d get a cut worth 10 percent of wages of newly hired or retained slots. That credit would rise by half if the jobs were located in high-poverty, high-unemployment communities. And the credit would be made permanent, rather than having to be renewed every five years. […]

An alternative version offered by Sens. Pam Althoff, R-Crystal Lake, and Melissa Bush, D-Grayslake, would limit the credits to net new hires and allow them to be collected over a 10-year period—15 years in the case of facilities located in poor communities.

* The Althoff bill renames the program to THRIVE. WAND TV

A House committee heard from the Department of Commerce and Economic Opportunity on their support for the Transforming, Helping and Reviving Illinois’ Versatile Economy program, or THRIVE. According to Sean McCarthy, Director of the Department of Commerce and Economic Opportunity, This program is an update to the Economic Development for a Growing Economy, or EDGE program.

Under THRIVE businesses would still be given a tax credit incentive for job creation. THRIVE would also change the Illinois tax withholding for jobs creation from 100 percent under EDGE to half that, at 50 percent.

THRIVE would also allow for businesses of all sizes to be eligible for this tax credit. “The eligibility threshold is modified so small businesses have a greater access to the program.THRIVE provides that any company regardless of the size has easier access to the incentive” said McCarthy. “So for example the current EDGE program you have a requirement of 25 jobs and a capitol investment of $5 million. In THRIVE the eligibility is 10 percent of the global workforce or 50 jobs, whatever is lesser.”

THRIVE would also redefine the “But, for” clause that is current in EDGE. This would end the practice of companies seeking incentive offers from other states, while still requiring businesses to submit a case for why the incentive is needed.

* From the Illinois Policy Institute’s news service

State Rep. David McSweeney, R-Barrington, questioned the propriety of the state singling out businesses for tax breaks.

“Why should the state of Illinois pick winners and losers? Why not keep tax rates relatively low?” McSweeney asked, while suggesting Illinois get rid of the credit process and create a deduction for a corporation’s portion of its Illinois net income earned as a result of a manufacturing process.

House Majority Leady Barbara Flynn Currie questioned McCarthy on how the state ensures that they’re giving credits to create jobs, not as political favors.

“If we are going to create special incentives, we want to make sure that there was a reason to do it, not just glad-handing,” she said.

* Related…

* State’s EDGE tax-credit deals with Amazon, other firms now viewable online

- Posted by Rich Miller        

  1. - Anon221 - Friday, Mar 17, 17 @ 11:47 am:

    Been a lot of EDGEies done since 2015…

    Rivian Automotive and Amazon seems like the two largest.

  2. - 47th Ward - Friday, Mar 17, 17 @ 11:49 am:

    Why don’t they call it the “Biggest Unfunded Dumb Gimmick Ever Tried?” At least then they could say they passed a BUDGET.

  3. - sulla - Friday, Mar 17, 17 @ 12:09 pm:

    THRIVE over EDGE all day.

    One key thing that is not getting much attention is the fact that THRIVE is a transferable credit, meaning that the company that receives the credit can sell it to someone else if so desired. This makes the credits more fungible and flexible for recipients. EDGE could only be utilized by the company that was awarded the credit. Meaning, if the recipient company wasn’t profitable that year, the credit was valueless. This is why over half of the EDGE tax credits awarded over the lifetime of the program were never actually redeemed. (And consequently also why the true fiscal impact of EDGE credits are chronically misrepresented.) See the Tribune article on the program from 2014 for the numbers.

    Per the IPI argument against tax credits: put up or shut up. You ideologues keep talking about creating this magical low tax environment that would eliminate the need for tax credits. Great. But until your utopia is realized, these kinds of economic development incentives are a necessary evil. So do us all a favor and stop complaining about tax credits and start winning elections and put your policies in place. Talk minus action equals zero.

  4. - Henry Francis - Friday, Mar 17, 17 @ 12:12 pm:

    Why is DCEO redacting the amount of capital investment from the agreements? And why aren’t any of the schedules included (which show types of jobs and salaries)? I understand businesses would prefer to keep that as private as they can, but when the government is using taxpayers’ funds to help improve businesses’ bottom lines, don’t the taxpayers have right to see what kind of return they should expect on their investment?

    I mean Bruce was sure to do that at GTCR. Their investors had tons of information regarding what kind of ROI they could expect.

    And Bruce is always telling us how he is laser focused on getting a better return for taxpayers.

    So why are they hiding the ball?

    Previous administrations disclosed this information.

  5. - wordslinger - Friday, Mar 17, 17 @ 12:27 pm:

    The froncs publish a story that you can now view recipients of EDGE credits online — but don’t include the website.

    Has the last editor finally been canned?

    By the way, the DCEO home page is all ga-ga now with positive Illinois economic news. Is that the pre-election pivot?

    I’d post the link, but this gizmo doesn’t cut and paste.
    But go to the DCEO home page for all the news from the Rauner administration as to how Illinois is a national leader in positive economic news.

  6. - Honeybear - Friday, Mar 17, 17 @ 1:21 pm:

    Look at the Rivian deal. My God what a sham. Only 35 jobs till the end of 2018? 49 million for 35 jobs for close to 2 years. We the taxpayers basically just paid for them to buy that building didn’t we?

  7. - Honeybear - Friday, Mar 17, 17 @ 1:30 pm:

    Now Google Rivian. Flashy website. Open since 2009

    Not a car EVER produced.

    49 million folks

    Think of the kids
    Think of the seniors.
    Think of our contractors
    Think of 49 million other ways we could have used that money

  8. - wordslinger - Friday, Mar 17, 17 @ 1:41 pm:

    Google “Rivian Florida” and read about their grift down there. Wild conflict of interest with a state lawmaker.

    Since 2009, this “automaker” has raised only $1.25M in private financing and never produced a prototype. They’re just bouncing from state to state, taking handouts from “economic development” officials whose jobs are to give away taxpayer money.

    If government is going to invest in private enterprise, the taxpayers deserve an equity stake. Otherwise, it’s just an expensive p.r. machine for politicians.

  9. - blue dog dem - Friday, Mar 17, 17 @ 1:44 pm:

    I would get rid of the waste that is EDGE or THRIVE in its entirety. The whole ball of wax.

  10. - Honeybear - Friday, Mar 17, 17 @ 1:50 pm:

    Oh and because they are in an enterprise zone they won’t pay a dime in taxes on all the machinery for that factory.
    They also won’t pay a cent in utility taxes
    All that electricity and not a cent goes to state or local coffers.
    For a can’t that has yet to make a single car
    why aren’t conservatives howling about this?

  11. - notsosure - Friday, Mar 17, 17 @ 2:10 pm:

    sulla is right–these numbers can be misleading because they’re the cap, not the actual tax break. That $49 million to Rivian wouldn’t have been paid to them if they didn’t live up to their end of the deal.

  12. - Anon221 - Friday, Mar 17, 17 @ 2:28 pm:

    My bet on Rivian… RJ is waiting for a buyout from one of the major leaders in the type of auto he’s been touting for years. Lot of activity in that sector right now. His leverage of EDGE may or may not help him in that endeavor depending on what milestones he meets with the state and local agreements for cash.

    And, on another front in the BN area that may have an effect on the Rivian deal…

  13. - Honeybear - Friday, Mar 17, 17 @ 2:50 pm:

    Notsosure not true. They just got the deal. We won’t know how much they cashed for over a year after the deal was inked. And come on, a company like Rivian which hasn’t produced a car is not going to use every cent of that grant? Nope they are latched on to that teet!

  14. - Blue dog dem - Friday, Mar 17, 17 @ 3:41 pm:


  15. - sulla - Friday, Mar 17, 17 @ 4:16 pm:

    Blue Dog Dem:


    Tell that to the millions of Americans who actively demand that their local, state and federal government assume the responsibility for job creation.

    Voters give elected officials every reason in the world to intervene in business location decisions and subvert market forces to the benefit of their districts.

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