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After losing thousands of jobs in the past four years, the Rockford area is finally catching a break. 1,000 high-paying factory jobs at Chrysler, plus lots of suppliers are building new plants in the area.
DaimlerChrysler Corp. will invest $419 million to upgrade the aging Belvidere assembly plant, adding up to 1,000 new jobs and a second production shift which will start in March 2006. […]Halprin said when the work is completed the plant would increase production from one shift to two for the first time since 2000. […]
After refurbishing, the factory will manufacture a replacement for the Dodge Neon, which will cease production in September 2005.
The state will kick in $36 million, which works out to about $36 thousand per job, not including all the other new positions created by suppliers and construction. That’s not terribly huge, considering some of the other schemes that have been tried in the past.
posted by Rich Miller
Wednesday, Jan 26, 05 @ 1:18 am
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So when Rod was running for Governor, the incentives granted for the Diamondstar plant in Bloomington were corporate give aways and he was going to have a new way of doing business. Now as Governor, through this incentive package under the EDGE program he appears to be authorizing Daimler Chrysler to obtain a credit against their Illinois corporate income taxes equal to some percentage of the personal income taxes paid by the 1,000 new employees for 10 years. For example, assume they give a credit equal to 50% of the state income tax paid by 1,000 employees (the law authorizes a negotiated credit up to 100%). So, figure out the average taxable income of those employees (say $40,000), reduce that amount by the dependent deductions to which they are entitled (say 3@ $2,000 each), take that amount ($34,000)times the state incomee tax rate of 3% ($1020), divide that amount by 2 ($510), take this amount times 1,000($510,000) and that is the corporate income tax credit that will be received each year for 10 years. If they received a 100% EDGE credit then we’re talking about over a million a year in state income tax savings from this part of the deal alone.
In addition, they will receive investment tax credits against the corporate income tax for new machinery and equipment, etc.
Probably not all that unreasonable a deal - but not a “new way of doing business.”
Comment by Anonymous Wednesday, Jan 26, 05 @ 12:24 pm