On corporate giveaways

By STATE REP. BARBARA FLYNN CURRIE (D-25)

Archer Daniels Midland (ADM) asks for a state handout to facilitate the company’s decision to stay in Illinois.

ADM is a Fortune 100 company with sales last year that reached nearly $90 billion. ADM would like to leave Decatur, its home of 44 years, and move to Chicago, with its strong global networks in transportation and finance.

The company is asking for a change in state law that could entitle it to as much as $24 million in state funds over the next 20 years.

But why should state taxpayers fund a move from one Illinois location to another? It might be a feather in Chicago’s cap to claim ADM, but a move to Chicago from Decatur does nothing to improve the state’s overall economy.

Why does ADM need a change in state law? Today companies that make a minimum investment in jobs and capital may be entitled to an Economic Development for a Growing Economy (EDGE) credit against their state income tax liabilities.

But ADM apparently can’t qualify for a traditional EDGE credit. It seems there are years in which the corporation has zero state tax liability — did I mention ADM is a Fortune 100 company with sales that reached nearly $90 billion last year? Without tax liability, ADM has no way to offset the credit. Instead, ADM proposes to take the credit against the income taxes it withholds from its employees. While I don’t need to underscore the point that those dollars don’t belong to ADM, it is worth noting that ADM’s aren’t the first corporate managers to ask for this change in the EDGE credit — Navistar, Ford, Sears and others have all fed at this public trough before them.

ADM promises to add 100 jobs and retain 100 employees in order to qualify for the EDGE credit. For larger credits, Sears promised a total of 4,250 jobs while Navistar agreed to a total of 2,400. Yet a quick paper-and-pencil calculation suggests ADM’s proposal means taxpayers could fork over $120,000 for every job ADM adds or retains.

Governors and lawmakers are under strong pressure to keep high-profile companies from jumping ship. Texas Governor Rick Perry hit town to tout the benefits of Texas in his (apparently unsuccessful) effort to poach Illinois jobs, and neighboring states put up billboards at the borders telling our companies that they (presumably unlike us) are open for business.

Perhaps it’s time for the states to band together to stop the round-robin game of economic blackmail that pits one state against another in the quest for jobs and economic development. After all, one state’s win over another does nothing to improve the nation’s gross domestic product. And each individual win costs money that could otherwise be used for the kind of economic development that benefits us all, including a strong educational system and robust job-training initiatives.

And perhaps it’s time for Illinois policy makers to review our state’s overall tax structure. Why is it that, according to the state’s Department of Revenue, two-thirds of the corporations doing business in Illinois have zero state tax liability? What tax incentives — research and development, for example — does ADM currently employ to eliminate or reduce its state income tax liabilities? How is it that small businesses are left out of the EDGE equation? Are our state tax incentives simple handouts or do they effectively promote growth?

While our state’s overall corporate taxes are not out of line with taxes owed in our neighbor states, our patchwork of deductions and credits raises questions about the evenhandedness of our tax structure. The Illinois Chamber of Commerce has testified that it’s time to revisit overall state tax policy with an eye to fair play across the board.

It’s supply and demand that should determine economic success in the marketplace. It isn’t the state’s business to pick corporate winners — and losers.