Lawmakers hash out details on state-granted tax breaks
Lawmakers are torn on whether to entice businesses to grow in Illinois with state-approved job creation credits.
The Illinois Economic Development for a Growing Economy tax credit, or EDGE credit, is a tool that the state’s Department of Commerce and Economic Opportunity uses to incentivize businesses to locate or stay in Illinois. Lawmakers Thursday heard the DCEO’s proposal for a replacement that they say would be better for small businesses and more responsible with taxpayer dollars.
The EDGE program “is an important local economic development tool that has allowed Illinois and our local communities to attract capital investment, create jobs and produce economic activity,” DCEO Director Sean McCarthy said.
State Rep. David McSweeney, R-Barrington, questioned the propriety of the state singling out businesses for tax breaks.
“Why should the state of Illinois pick winners and losers? Why not keep tax rates relatively low?” McSweeney asked, while suggesting Illinois get rid of the credit process and create a deduction for a corporation’s portion of its Illinois net income earned as a result of a manufacturing process.
House Majority Leady Barbara Flynn Currie questioned McCarthy on how the state ensures that they’re giving credits to create jobs, not as political favors.
“If we are going to create special incentives, we want to make sure that there was a reason to do it, not just glad-handing,” she said.
The credit is due to expire April 30 after being extended for four months. Since the EDGE Credit was approved in 1999, Illinois has approved more than 800 tax grants through 2015, according to DCEO.
One of the proposed replacements, called the Transforming, Helping, and Reviving Illinois’ Versatile Economy (THRIVE) Job Creation Tax Credit Act, is supported by McCarthy’s department. It would give the state a better way to take back funds that they may have given to a company that didn’t follow through on its promise to create jobs in Illinois as well as cap the level of incentives at half of the profit from a new project, not 100 percent as it was with EDGE.
According to the Taxpayers Federation of Illinois, nearly every other state that has a corporate income tax has some form of credit system that they can use to give businesses a way around portions of it if they expand or create more jobs locally.
A previous version of this story indicated state Rep. McSweeney’s suggestions incorrectly; he advocates creating a 100 percent deduction for businesses’ net income as a result of a manufacturing process inside of the state.
–Illinois News Network