As I reported in July, the Chicago Mercantile Exchange is considering leaving Chicago and Illinois due to the combined tax burden imposed by the city and the state. Apparently, the big retail chain Sears is also looking at relocation for the same reasons. Now the Chicago Sun Times reports that the Illinois state legislature is trying to stitch together a big tax-break package to keep these two corporations in Chicago. It is not going very well, though:
A huge tax-break plan designed to keep Chicago’s futures exchanges and Sears from leaving Illinois blew up Tuesday in a blaze of partisan fireworks, all but assuring that state lawmakers won’t take up the divisive issue again until next year at the earliest. The House and Senate’s inability to reconcile about $75 million worth of differences between two similar tax-relief packages capped a busy legislative day … it was the tax-relief deal aimed at addressing threats from CME Group Inc. and Sears Holding Corp. to move out of Illinois that consumed most of the day’s political oxygen at the Statehouse. The Senate voted out its own tax-break plan supported by Gov. Pat Quinn by a 36-18 margin, with one member voting present…
Who was that? I’d like to know so I can make my bets on who is going to run for president in 2016.
…only to see the measure dissolve in spectacular fashion in the House, where it drew only eight aye votes and 99 in opposition. … House critics of the Senate plan argued the cash-strapped state should pay overdue bills before serving up bailouts to big corporations and that the working class was getting pennies on the dollar and no real jobs under the plan. … [Governor] Quinn favored the Senate version, which provided $100 million in tax savings to Sears and CME, which operates the Chicago Board of Trade and the Chicago Mercantile Exchange. The Senate plan also would have doubled the size of a state tax credit for the working poor, tied the personal exemption all taxpayers get to inflation, and established a $2 million tax credit program designed to draw Broadway productions to Chicago’s theater district. The House plan offered a smaller increase in the state earned income tax credit, didn’t tie the standard exemption to inflation and offered only $1 million for the theater tax credit.
This all comes within a year of the monstrous income tax increase in Illinois, which effectively brought the state’s economic recovery to a halt. The conclusion of the state legislature’s tax policy is that it is perfectly fine to take money out of the pockets of regular citizens, but when those same legislators risk driving a big, symbolically important corporation out of the state, then tax cuts are perfectly fine. The suggested tax break for the poor is a welcome effort by the legislature, but it only compounds the image of an opportunist legislature that is more concerned with looking good than doing right.
Illinois is in bad shape economically. The state needs free-market reforms, privatization of costly entitlement programs and tax cuts for everyone, big or small.