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Some ADM context

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Illinois

* The House Revenue Committee is meeting today to talk about various corporate tax breaks. Watch it live.

ADM’s fiscal officer was asked why the company didn’t just use existing tax law to underwrite its move to Chicago. ADM has dropped its request for a cut to its public utility taxes, but does want an EDGE credit. His response…

“There will be years when our income tax liability will be minimal.”

The EDGE credit allows corporations which are creating some jobs to essentially pocket the state income taxes they withhold from their employees’ paychecks. Why? Because so many corporations don’t pay much, if any, state income taxes here.

The company officer estimated that the EDGE credit it is seeking for its Chicago move (200 employees, including 100 new workers) is about $1.2 million a year. The company’s annual earnings, the officer said, average between $1-2 billion a year.

So, ADM, one of the the largest companies in the state, is paying less than $1.2 million in state income taxes in at least some years.

And that’s why the company’s guy dodged Rep. Dave McSweeney’s question about whether ADM would help him support lower tax rates in general. The simple fact is they don’t pay a lot of income taxes here. Lower overall rates just won’t matter.

posted by Rich Miller
Tuesday, Oct 1, 13 @ 10:37 am

Comments

Now that’s the way to generate some revenue from those who actually HAVE it to run our state which they keep telling me is BROKE.

Comment by Anonymous Tuesday, Oct 1, 13 @ 10:39 am
Why not ask Ty and the Civic Committee what they think? I’d like to see them squirm out of this one.

Comment by Sir Reel Tuesday, Oct 1, 13 @ 10:44 am
–The EDGE credit allows corporations who are creating some jobs to essentially pocket the state income taxes they withhold from their employees’ paychecks. Why? Because so many corporations don’t pay much, if any, state income taxes here–

Sounds like a good climate for big business. Maybe Quinn should do a road show to Texas.

Comment by wordslinger Tuesday, Oct 1, 13 @ 10:45 am
==Because so many corporations don’t pay much, if any, state income taxes here==

This is exactly why I think comments about the state being so unfriendly to business are ridiculous.

Comment by Demoralized Tuesday, Oct 1, 13 @ 10:48 am
So it’s the individual income tax rate that the tea’ers are ranting about. Gee, cheap, cheap, cheap………

Comment by Jim'e' Tuesday, Oct 1, 13 @ 10:48 am
In other words, many of the largest Illinois companies who complain publicly about corporate income taxes, actually pay little or none.

Instead, they are asking the state to give them money for maintaining and creating jobs. And that money comes from the rest of of the taxpayers.

Arguments by the Chamber or Civic Committee that high corporate taxes must be lowered for their big businesses members, are just so much baloney.

However, the argument does hold water for small and medium businesses, who are the actual job creators.

Comment by walkinfool Tuesday, Oct 1, 13 @ 10:55 am
Wouldn’t that be largely due to depreciation resulting from high capital expenditures?

Comment by Judgment Day (Road Trip) Tuesday, Oct 1, 13 @ 10:57 am
===depreciation resulting from high capital expenditures? ===

In some years, yes.

Comment by Rich Miller Tuesday, Oct 1, 13 @ 10:58 am
This is like something out of Dickens.

Illinois citizens and small businesses get whacked with a tax increase.

Education and human services budgets are cut.

Pensioneers are told they need to take a haircut of contracted benefits for services already rendered.

Yet one of the world’s largest corporations, which has net profits of nearly $2 billion a year, has the nerve to ask for a few million more a year. Not in tax cuts. They don’t pay taxes. Just more money.

Talk about class warfare. It’s the corporate class making war on the people. And they are kicking our asses.

Comment by wordslinger Tuesday, Oct 1, 13 @ 11:08 am
Wordslinger, so right. How to stop it?

Comment by Anonymous Tuesday, Oct 1, 13 @ 11:15 am
Crazy tax avoidance schemes.

Time to come up with some sort of AMT for the corporations who are profitable. It’s one thing to pay no taxes when you lose money, but there should be tax paid if there is a profit.

Comment by Plutocrat03 Tuesday, Oct 1, 13 @ 11:18 am
In this case McSweeney’s following the national GOP line, as usual, without knowing the reality in the marketplace.

Comment by walkinfool Tuesday, Oct 1, 13 @ 11:20 am
It all kind of gives new meaning to the whole ‘makers vs takers’ argument we’ve had to hear. Who really are the ‘takers’?

Comment by train111 Tuesday, Oct 1, 13 @ 11:41 am
Meanwhile, outrage continues when a bag of chips is purchased by a single mom on a LINK card.

Comment by Old Shepherd Tuesday, Oct 1, 13 @ 11:55 am
The double standards are epic. Outrage at a pension of 45K but billions in profit are simply not enough. So, exactly, just how much is enough?

Comment by Anonymous Tuesday, Oct 1, 13 @ 11:57 am
Changing the balance of power between govt and corporations is probably outside the power of our state legislatures unfortunately. In a global trade world Illinois just doesn’t have the market share to have any power of them, nor does the US that much.

Changing that balance of power would require fundamentally changing how we think about corporations, how corporate law is interpreted by the courts and taught in law schools and how corporations are discussed in the public sphere.

Hardly anyone even realizes or thinks about how corporations are a creature of govt that only exist by the sanction of govt and have already been gifted with limited liability by the govt so they come on the scene with special perks us individual humans don’t get as economic participants.

Also somehow people forget that not just people but also corporations avail themselves of public services just like people do so that is another reason they should be taxed. Yeah ADM may pay some taxes but it also uses Illinois roads and courts, etc. Its not just there as a benevolent job creator that asks nothing from the state.

Comment by hisgirlfriday Tuesday, Oct 1, 13 @ 11:59 am
–Meanwhile, outrage continues when a bag of chips is purchased by a single mom on a LINK card.–

Good point.

Perhaps the state should require urine tests for the boards of directors of companies seeking EDGE credits.

Sen. Rose, this is in your wheelhouse, buddy.

Comment by wordslinger Tuesday, Oct 1, 13 @ 12:01 pm
==Its not just there as a benevolent job creator that asks nothing from the state==

This, exactly, hisgirl! Actually, I’d like to second your whole post. We’re using 20th (or even 19th) century thinking for 21st century realities. It’s just not a model we can continue to sustain.

Comment by Katiedid Tuesday, Oct 1, 13 @ 12:04 pm
===without knowing the reality in the marketplace. ===

I wouldn’t say that. The guy is rich.

Comment by Rich Miller Tuesday, Oct 1, 13 @ 12:15 pm
What drives me crazy is the blithe assumption that shaking down the state for every last nickel is just another natural and inevitable event in the course of corporate operations. No, it’s not; the people running that corporation are making a choice that should be evaluated on its merits, not based on mythology about “job creators.” I agree with hisgirl that changing the balance of power between corporations and govt is mostly beyond the legislature. But we’d be better off if we all understood that corporations are a legal construction created by the government.

Comment by davidh Tuesday, Oct 1, 13 @ 12:30 pm
I was asked the other day to interview for a job out there in Academia. I turned it down flat–no way am I messing with my retirement funds by working for the state.

I can’t be the only one with this attitude, which is going to hurt state universities. They simply can longer compete for workers.

Comment by Chavez-respecting Obamist Tuesday, Oct 1, 13 @ 12:42 pm
A good reason to eliminate the corporate income tax for all companies, and go instead to a graduated income tax equivalent to NY and California.

Comment by cod Tuesday, Oct 1, 13 @ 12:48 pm
I have seen numbers for an incentive package in the neighborhood of $250 million dollars.

Does this make sense for “200″ jobs?

Can’t wait to see the price tag when ADM decides to move its new “North American” headquarters out of state.

Comment by CIC Tuesday, Oct 1, 13 @ 12:52 pm
===I have seen numbers for an incentive package in the neighborhood of $250 million dollars. ===

Those were obviously a product of someone’s imagination.

Comment by Rich Miller Tuesday, Oct 1, 13 @ 12:52 pm
It’s not the jobs per se, it’s the prestige. These Fortune 500 companies are like sports teams, losing one takes some of the shine off a state’s apple. We’re talking optics here. Look at Boeing as an example.

Comment by Robo Tuesday, Oct 1, 13 @ 12:59 pm
“comments about the state being so unfriendly to business are ridiculous”

Probably true when the businesses in question are high profile multi national corporations with enough clout to get big tax breaks. But what about the smaller businesses that do not have the clout or the resources to get such breaks?

If one big business with 2,000 employees is kept open or kept from moving elsewhere by tax breaks, that’s good; but if 40 small businesses that each employ 50 people close up shop or leave the state, for a total loss of 2,000 other jobs, what has been gained?

Comment by Secret Square Tuesday, Oct 1, 13 @ 1:39 pm
==but if 40 small businesses that each employ 50 people close up shop or leave the state, for a total loss of 2,000 other jobs, what has been gained? ==

As Robo said, optics. Plus those small businesses probably don’t have skyboxes at some politician’s favorite arena/stadium.

Comment by Anon. Tuesday, Oct 1, 13 @ 1:52 pm
@Secret:

I thought about that and your point is well taken. But as far as big business goes I think what I said is true.

Comment by Demoralized Tuesday, Oct 1, 13 @ 2:35 pm
Rich -

You’re missing a major point. While ADM had net earnings, the VAST majority was earned OUTSIDE of Illinois meaning that it is NOT taxed in Illinois. They clearly made this point in the discussion today.

Secondly, ADM will be ADDING jobs and the EDGE tax credit will only provide a benefit if they create these jobs. If the jobs are not created, they they get no benefit.

As a global company, I understand their need to be in a major city with an international airport. Last time I checked, Decatur cancelled their direct flights to Europe, Asia, and South America. It’s very hard to attract top notch talent to Decatur.

Comment by 4 percent Tuesday, Oct 1, 13 @ 5:54 pm
n

Comment by Judgment Day (Road Trip) Tuesday, Oct 1, 13 @ 6:38 pm