Efforts to change business tax climate fall short

By Caitlin Rydinsky

A last minute push to change a highly scrutinized tax credit used by large corporations failed to move forward in the Senate.

House Speaker Michael Madigan, who sponsored Senate Bill 364, said the measure would allow smaller businesses more opportunities to gain the Economic Development for a Growing Economy (EDGE) tax credit and improve job development in areas that have high poverty and unemployment.

In recent years, a handful of larger business have requested special versions of the tax credit from the legislature in order to keep them from moving out of the state. Some that received the credit did not hire new employees, and some even laid employees off. Rep. Jack Franks, a Democrat from Marengo, said “I found that particularly distasteful in previous EDGE deals where employers would be able to claim retention of employees while at the same time actually reducing head count, then we would subsidize the termination of tax paying Illinoisans.”

Supporters in the House said the bill was a good step toward stopping the state from giving special breaks to companies that can afford to lobby them and broadening the availability to EDGE credits for employers with less than 100 employees by eliminating a $1 million capital spending requirement. The legislation came after a special house committee that was weighing the tax climate for Illinois businesses was unable to reach a consensus on any substantial recommendations. “We had been hopeful of a broader based bill, but we ran out of time in this session and the purpose of the legislation is to have that available as we continue discussions over the summer and fall sessions,” Madigan said. “I happen to think it’s a real good opportunity for Illinois to make some significant, meaningful change in the business tax credit that will help Illinois business going forward.”

Rep. David Harris, an Arlington Heights Republican, said that a provision in the bill that requires companies seeking special edge credits to make financial disclosures would likely put a damper on them coming to lawmakers for a tailored tax break. “They have to provide information which is so onerous to companies, so distasteful for a company, that they would say ‘uh-huh I’m not putting that kind of information out there for the public to see.’ It effectively stops the company, unless they are going to do everything in the bill and my sense is no company would want to do, it effectively stops that special company from coming to us. It stops us from having to pick winners and losers,” Harris said.

But Barrington Hills Republican Rep. David McSweeney said lawmakers should be focusing on other ways to improve the business climate within the state of Illinois. “We should be cutting corporate tax rates and cutting tax rates for individuals and small businesses,” he said. “This continues the program that the government is going to pick winners and losers. We’re much better off cutting tax rates across the board.”

The House approved the bill on the final day of the spring legislative session, but the Senate did not bring it up for a vote. Decatur Democratic Sen. Andy Manar, a sponsor of the bill, said: “It’s a comprehensive piece of legislation that was introduced in the final weeks of session. I would expect that the Senate President [John Cullerton], the sponsor of the bill and the Senate would want to have thorough review before the Senate takes it up.” Although the legislation was not called for a vote in the Senate, Democrats said the legislation is still “on the table” and could be considered over the summer or in fall veto session.