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When one person’s egregious tax break is another person’s competitive lifeline

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Illinois

* Hmm…

Trick or treat? Luxury private jet facilities didn't pay their taxes for four years, so the Illinois House voted to forgive that debt, and to give them tax breaks through 2024.

The estimated cost to taxpayers? $50 million.

Happy Halloween, Illinois.https://t.co/vUXdr2oj1B

— Mark Maxwell (@MarkMaxwellTV) October 31, 2019

* From the story…

West Star Aviation in East Alton employs 507 employees in Bristow’s district, and the company benefits directly from this handout. According to Bristow, the company has used a portion of its tax savings to invest $32 million into its facilities, increase payroll by 400 percent, and pay workers a median income of $82,000 per year.

State lawmakers carved out the tax break specifically for West Star and 13 other private jet facilities in Illinois. It does not apply to commercial airliners.

In 2010, lawmakers approved a tax incentive for the private jet makers and repair shops. In 2014, while the state was entering a period of record fiscal pressure, a separate law automatically ended all permanent tax breaks that did not sunset or expire on their own.

The private jet facilities did not collect or pay any sales tax from 2015 through 2019, even though the law required them to. During the Rauner administration, the Department of Revenue conducted audits at some of the private luxury jet shops but failed to identify the missing tax revenue. The Illinois Aviation Trades Association tallied up the total estimated cost of the outstanding tax bill as roughly $50 million.

Private jets fly into Illinois for special repairs, Bristow says, sometimes from other countries. Without the tax break, she argues those customers would land their plane and take their business to any one of the 35 other states who have similar tax breaks.

Indeed, a lobbyist for one such Champaign company wrote a letter to the Senate President saying the company could lose up to half its business if the tax break isn’t restored because so many other states have this same tax break.

The bill cleared the House 113-0 with one voting “Present” (Hammond). It has bipartisan sponsorship in the Senate.

If Congress and the White House were responsible and functional, I’d say they ought to ban these state and local tax breaks designed to poach businesses from elsewhere. But they’re obviously neither responsible nor functional so I won’t.

posted by Rich Miller
Friday, Nov 1, 19 @ 10:38 am

Comments

It always amazes me how sometimes the GA gives an industry a tax incentive and that is a good thing, like the film tax credit, and other times the same GA raises taxes on corporations that can afford to pay for all the goodies the GA wants.

Comment by Just Me 2 Friday, Nov 1, 19 @ 10:43 am
I would like to know where I can learn lobbyist math. I mean is there an actual science to it (real number multiplied by some multiplier to over state the impact)? Or do the lobbyists just make it up as they go?

Comment by Chicagonk Friday, Nov 1, 19 @ 10:54 am
The Government Giveth and the Government Taketh Away

Comment by Donnie Elgin Friday, Nov 1, 19 @ 11:12 am
Grifters- “Taxes are bad, but I want the stuff that taxes pay for”

Comment by JS Mill Friday, Nov 1, 19 @ 11:13 am
Who was the lobbyist who signed the letter? It appears that no one has ever registered for the company in Chamoaign, Flightstar. Sent a letter but fvorgot to register?

Comment by Altgelds Ghost Friday, Nov 1, 19 @ 11:20 am
“If Congress and the White House were responsible and functional, I’d say they ought to ban these state and local tax breaks designed to poach businesses from elsewhere.”

Rich, If the tax breaks were all equal, or eliminated, don’t you think businesses would still make decisions based on items like: energy costs, workers compensation, minimum wages, income and property tax?

Even if congress acted on something like this, it seems that they would fairly quickly start to play “whack a mole”, as they chased the other decision points expanding firms.

Comment by Downstate Friday, Nov 1, 19 @ 11:28 am
The history in the article is a little bit off. It wasn’t a new law or hard fiscal times that terminated the tax break. About 25 years ago, the General Assembly inserted a provision into just about all of the state tax acts that provided that any tax breaks enacted in the future had to have a reasonable sunset date and that any one that did not would automatically terminate after 5 years. Since then, bills enacting new tax breaks routinely state that they are exempt from automatic termination, but every now and then the General Assembly misses one, as they did here. When they do that, they often reinstate the tax break retroactively.

Comment by Whatever Friday, Nov 1, 19 @ 11:40 am
These overly- sweet tax deals with corporations should be outlawed nationally, but Congress will never pass such a bill. Do they have to prove their business will go under if they don’t get those sweet tax cuts?

Oh the other hand, why should the average tax payer pay more taxes just because big business doesn’t want to pay taxes?

Someone has to pay taxes for the services that people demand from the State and Federal governments.

Comment by M Friday, Nov 1, 19 @ 11:51 am
=Rich, If the tax breaks were all equal, or eliminated, don’t you think businesses would still make decisions based on items like: energy costs, workers compensation, minimum wages, income and property tax?=

If that was all they looked at then everyone would be located in Mexico and India.

They look for a workforce that fits their needs, transportation, culture (for CEO’s especially) and the reason Mississippi does not have a multi trillion dollar GDP.

Comment by JS Mill Friday, Nov 1, 19 @ 11:58 am
It is awful tax policy to ask Congress to step in to fix what some may believe to be a problem. The whole point of federalism is to allow states to do their thing. There are a number of tax exemptions in the sales tax to allow companies to temporarily possess property in the state without incurring use tax. This one creates high paying jobs and is actually one of the exemption that shows positive results. Someone should calculate the income taxes paid by all the workers and the benefit of the workers’ consumption. If the tax break expired, I do not agree it should be reinstated retroactively.

Comment by SW Friday, Nov 1, 19 @ 12:09 pm
Big Jim and Jerry Reinsdorf approvingly nod at this deal

Comment by Jose Abreu's Next Homerun Friday, Nov 1, 19 @ 12:18 pm
Illinois doesn’t stop neighboring cities from poaching, so yeah, why would you expect D.C. to step up?

Comment by Shemp Friday, Nov 1, 19 @ 12:47 pm
===The whole point of federalism is to allow states to do their thing.===

And to mediate disputes between states. Like “regulate interstate commerce.” Such as states competing with each other in a race to the bottom, when they should be working together to promote American jobs. Rising tide lifts boats and all.

Now, I agree that asking Congress to fix this is a losing proposition. Not only are they not in a position to lead on this issue, the fix would leave us worse off.

Comment by thechampaignlife Friday, Nov 1, 19 @ 12:50 pm
“They look for a workforce that fits their needs, transportation, culture (for CEO’s especially) and the reason Mississippi does not have a multi trillion dollar GDP.”

Absolutely agree. So just eliminating tax breaks won’t make Illinois more competitive.

Comment by Downstate Friday, Nov 1, 19 @ 2:08 pm