Tag Archives: tax breaks

In Illinois as in Wisconsin, tax breaks to corporations have failed to create the promised jobs

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.

Gay couples win equal tax benefits in German court

Gay rights campaigners won a victory over the German government on June 6 as the country’s top court ruled that same-sex couples in civil unions should receive the same tax benefits as heterosexual married couples.

The Federal Constitutional Court in Karlsruhe ruled that treating the two forms of partnership differently for tax purposes violates the country’s guarantee of equal rights.

Chancellor Angela Merkel’s center-right government had long resisted granting the same tax benefits to gay couples in civil unions. Those unions – officially certified by a notary and carrying similar rights and duties to wedlock – are widely accepted by Germany’s gay community as equivalent to marriage.

The court said that treating civil unions differently amounts to “unequal treatment because of sexual orientation.” Failure to be vigilant in guaranteeing equality “leads to discrimination against a minority,” it warned.

Married couples in Germany are able to jointly declare their taxable incomes, which can significantly lower their overall tax burden especially when one partner has higher pay. The rule costs the government annually about 15.5 billion euros ($20 billion), although it estimates that extending the same right to the country’s some 27,000 civil unions will only add about 30 million euros to the bill.

The court acknowledged that married couples enjoy special privileges because the partners also accept a strong responsibility for each other, including financial, but it argued that the civil union implies the same duties and responsibilities for gay partners.

The court ordered the government to retroactively amend the relevant laws dating back to 2001, when civil union status was first introduced by a previous center-left government.

Two of the court’s eight judges issued a dissenting minority opinion, but that does not affect the validity of the verdict.

The government vowed it will seek to get the necessary legislation passed by this fall to implement the court decision.

Gay rights campaigners cheered the court decision.

“This is a full-blown victory,” said opposition lawmaker Volker Beck, an outspoken gay-rights advocate. He added that the next hurdle should be to grant gay couples equal rights when it comes to adoption.

“The principle of equal treatment is valid for all citizens, independently of their sexual orientation,” said the German Association of Lesbians and Gays. Merkel’s government “refuses to learn that lesson by all means.”

Merkel’s party calls for tax breaks for Germany’s gay couples

A group of lawmakers from German Chancellor Angela Merkel’s conservative party called on Aug. 7 for same-sex couples in civil partnerships to be given the same tax breaks as heterosexual married couples, but the idea faced skepticism among traditionally minded colleagues.

Granting gay couples the same income tax breaks enjoyed by heterosexual married couples would add to a string of departures from conservative orthodoxy under Merkel’s leadership. Those have included abandoning military conscription and speeding up Germany’s exit from nuclear power.

In Germany, same-sex couples have been able to register civil partnerships that legally fall short of formal marriage since 2001. Heterosexual married couples can, unlike same-sex couples, reduce their tax burden by filing joint income tax returns, thus paying less than single taxpayers.

The partnerships were introduced by a previous center-left government. While Merkel’s party accepts them, many conservatives remain reluctant to go further; and Germany’s constitution states that “marriage and the family shall enjoy the special protection of the state.”

On Aug. 7, 13 Christian Democrats issued a joint statement saying that the move would be “only consistent” with the fact that gay partners have the same responsibilities toward each other as married spouses. They said they will seek fellow conservatives’ backing after parliament returns next month from its summer recess.

They won support from Merkel’s minister for families, Kristina Schroeder. The call comes “at the right time” and same-sex couples in civil partnerships “take on long-term responsibility for each other, so they live out conservative values,” Schroeder, a Christian Democrat, was quoted as telling the daily Sueddeutsche Zeitung.

Germany’s highest court earlier this month ruled that a civil servant in a same-sex partnership was wrongly denied a wage supplement granted to married colleagues, and the court is currently considering complaints against the difference in income tax rules.

The conservative lawmakers who are calling for a change said it was “not acceptable that policymakers repeatedly … have to be ordered by the Federal Constitutional Court to abolish this unequal treatment.”

Their call was welcomed by opposition parties and by the Free Democrats, the junior partners in Merkel’s center-right coalition, who have long called for a change.

But it may be a tough sell to some of their own colleagues – not least in the Christian Social Union, the socially conservative Bavarian sister party to Merkel’s Christian Democrats.

Gerda Hasselfeldt, the head of the CSU’s parliamentary group in Berlin, told news agency dapd she was “extremely skeptical” about granting same-sex couples equal tax treatment.

“Marriage between a man and a woman has special protection because it is fundamentally directed at the propagation of life,” Hasselfeldt said. “That is not the case in homosexual relationships.”

Noah’s Ark museum in Kentucky gets millions in tax breaks

The city of Williamstown in northern Kentucky’s Grant County is giving biblically themed amusement park a property tax discount of 75 percent over the next 30 years.

The tax deal is in addition to the state’s promise of $40 million worth of sales tax rebates and a possible $11 million in improvements to the interstate highway near the project that would be financed by the Kentucky Transportation Cabinet, according to Kentucky.com.

The project, which will feature a “full-size replica” of Noah’s Ark as it’s described in the Bible, is also getting $200,000 from Grant County and 100 acres of reduced-price land.

According to a consultant hired by the state tourism department, the project will draw nearly 1.4 million visitors a year from all over the United States to see, in addition to Noah’s Ark, a Tower of Babel and a village built to look like cities described in the Bible.

The developers, called Answers in Genesis, based their financial projections in part on the success of the Creation Museum in Boone County, where prehistoric children cavort alongside friendly dinosaurs. Since that museum opened in 2007, more than 1 million people have visited, according to its owners.

The developers have already raised between 75 percent and 80 percent of the project’s expected $150 million cost from private investors. So far, the group has spent about $2 million on the project, which is supposed to break ground in the next few months and open in 2014.