Tax giveaways to corporations are a key component of the Republicans formula for job growth. But they’ve failed miserably in Wisconsin and now there’s evidence they’ve flopped in Illinois as well.
The Chicago Tribune analyzed (http://trib.in/1GnWjHk ) 783 deals the state has made through the Economic Development for a Growing Economy program and found that two-thirds of the companies that completed agreements didn’t maintain agreed-upon job levels.
State officials also can’t say how many jobs have been created by the program, known as EDGE, which Republican Gov. Bruce Rauner wisely put on hold in June.
Since 1999, Illinois has promised more than $1 billion in EDGE tax breaks, which officials say helps lure new firms, hang onto employers who might move elsewhere and encouraging businesses to add jobs. Companies have so far collected about $450.3 million — money that, if collected, would help pay for public services such as education and health care.
Rauner’s move came this summer as he and the Democrats who control the General Assembly disagreed over a new state budget, though new deals the state reached with Amazon and ConAgra Foods before June have only been recently announced.
The Republican governor reiterated last week that, even when the EDGE program is restarted, the state won’t provide tax breaks unless companies create new jobs. At least 78 companies that have signed EDGE deals since 2004 were not required to add jobs, and at least 51 of those were made by the administration of Rauner’s predecessor, Democrat Pat Quinn.
But Rauner defended the tax breaks promised to ConAgra as crucial to the company’s plans to move its headquarters from Omaha, Nebraska, to Chicago. Neither ConAgra nor state officials have disclosed the terms of that deal beyond the requirement that the company add 150 new jobs.
“Getting corporate headquarters for a Fortune 500 company like ConAgra is a big deal long term to the economic growth in Illinois,” Rauner told The Associated Press. “And they will be adding jobs. We would not give them edge credits unless they were adding jobs.”
Recent headlines illustrate that some EDGE recipients not only don’t add new jobs, but cut employees. Mitsubishi received a new EDGE deal in 2011 but now plans to close its plant in Normal, cutting almost 1,200 jobs. Two more EDGE recipients also recently announced layoff plans: 500 jobs at Motorola Mobility in Chicago and 700 at Kraft Foods in Northfield.
Jim Schultz is the director of the Department of Commerce and Economic Opportunity, which oversees EDGE. He called the terms of many of the existing deals “very distasteful.”
David Vaught, a former Quinn budget chief and commerce director, told the newspaper that Quinn wanted to try “anything that could get us a job in a recession.” Some companies openly threatened to leave the state during the recession unless they received tax breaks.
When Quinn announced the $29 million deal with Mitsubishi, he proclaimed, “Illinois is Mitsubishi country and always will be.” But the company, which has received $5.2 million in tax breaks, plans to close the plant in November and move production overseas. A small staff will stay on through May, which could allow the car maker to avoid EDGE provisions requiring repayment if the company closes its Illinois facility within five years of signing the deal.
“When you’re in an economic emergency compounded by decades of financial recklessness, you fight to keep businesses and jobs in Illinois,” Quinn said in a statement defending deals he made.
Rep. Jack Franks, a Marengo Democrat who’s a longtime critic of EDGE tax breaks, calls the program “deeply flawed.”
“We have no idea what we’re getting in return in for our investment, and we don’t even know if anything works,” he said.
Wisconsinites who blame Gov. Scott Walker for the failure of his Wisconsin Economic Development Corporation should consider the mounting evidence that such programs simply don’t work. In Wisconsin, they’ve been nothing but gifts for Republicans’ cronies. Perhaps in Illinois, Democratic officials were the ones who made out like bandits.
It’s time to end pointless tax breaks for large corporations and the wealthy. In 30-plus years, it has never trickled down. It’s only squirted up.
Tax breaks must target the middle-class people who generate economic activity. They must be used for funding education, infrastructure and social programs — all of which help people who actually need the help.