By Illinois Radio Network
SPRINGFIELD – Illinois lawmakers want a truce with other states to stop the practice of poaching businesses with tax breaks.
State Rep. Bob Morgan, D-Deerfield, said economic incentives designed to attract businesses from other states or keep them in the state are a form of crony capitalism that doesn’t work.
“There’s little-to-no correlation between these tax credits and the growth of jobs in the state,” he said.
Morgan, along with state Sen. Ram Villivalam, D-Chicago, introduced legislation to create a compact among states so that member states won’t offer tax breaks to companies in exchange for corporate investment.
“If we’re going to claim that small businesses are the engine of our economy, we need to give them the level playing field to succeed,” Villivalam said.
So far, seven other states have introduced similar legislation. New York Assemblyman Ron T. Kim introduced legislation in that state in October 2019. In Florida, state Sen. Anna Eskamani filed the “Interstate Compact Agreement to Phase Out Corporate Giveaways” Act last month. Republican State Rep. Bill Plett of New Hampshire filed House Bill 1132, which was scheduled to be heard in committee Tuesday. Senate Bill 121 was filed in West Virginia earlier this month, with Iowa and Maryland following suit.
In Hawaii, three bills have been filed, including one by the father of presidential candidate Tulsi Gabbard.
Kansas and Missouri enacted a truce via executive orders that they would not offer each other’s businesses tax incentives to get them to cross the border.
The Illinois bill is structured in a way that would not mean Illinois would be alone in ending the use of incentives to attract businesses, Morgan said. It would only take effect when both states have enacted the legislation. It wouldn’t end the practice of giving out incentives for businesses already in Illinois either.
In 2017, the state of Illinois gave out nearly $200 million in economic incentives. The state offered $1.3 billion in a bid to win the state competition for Amazon’s HQ2, but was passed over.
Despite this, Illinois has proven fertile ground for other states looking to poach businesses. States such as Texas and cities like Miami have sent envoys to Illinois in an effort to bring them to their locales.
Business supplies company Uline was offered tax incentives to move its northern Illinois business just over the border to Pleasant Prairie, Wisconsin in 2008. It took nearly 500 jobs with it when it moved. Other companies have moved over the state’s borders to Indiana as well. Hoist Lift Truck moved from suburban Chicago to Indiana in 2015, citing the differing business climates in states as a factor.
The measure has yet to get Republican support, but conservative and libertarian organizations have spoken out against economic incentives.
“We don’t like the government picking winners and losers in the economy,” said Brian Costin, the Illinois director of Americans for Prosperity. “When they do, they usually pick wrong.”
The Mackinac Center, a free-market think tank in Michigan, released a report in 2019 that advocated for “disarmament” between states.
“There is broad consensus among academic economists that these programs are wasteful at best and actively damaging to a state’s economy at worst,” according to the report.
Neither Intersect Illinois or the Illinois Department of Commerce and Economic Opportunity, both facilitators of the state’s Economic Development for a Growing Economy, or EDGE, credits, responded to requests for comment on the legislation.
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