 "I built it from
scratch," Bohart said.Despite an income tax hike
in January and the proliferation of franchised hardware stores in
the area, Bohart said his Alton business is still holding up. But
ask about his thoughts on a plan to give CME Group and Sears Holding
Corp. millions of dollars in annual tax breaks to stay in Illinois
and he gets angry.
CME Group is the parent company of the Chicago Mercantile
Exchange and the Chicago Board of Trade, both of which make money by
trading in the financial markets.
"The state government has absolutely no reason to be giving any
tax money away. I just don't think it's right that they give
corporations tax breaks and other tax incentives," Bohart said.
For Bohart, it's a matter of survival. Just two miles from
Bohart's shop there's a Sears department store that he competes
with.
Legislators are working to give CME and Sears tax breaks to keep
the companies in the state. Both companies have said other states
are offering them incentives to move, which would be bruising to
state government's bottom line.
CME's $108 million in income taxes alone accounted for 6 percent
of the state's corporate income tax last year. Without $85 million
in proposed yearly tax breaks, CME will pay an estimated $158
million in income taxes this year.
Sears would get tax breaks of $15 million for the next decade.
Sears would also be allowed to continue getting a break on its local
property taxes for 15 years. The company has been paying reduced
property taxes for about 20 years.
Under the plan, Sears would be required to keep a minimum of
4,250 employees in the state at the company’s headquarters in
Hoffman Estates. But that would allow Sears to downsize its current
workforce of 6,100 by 1,850 and still get the benefits of lower
taxes.
Not everyone in the Legislature is on board with the tax breaks.
"When I think about the other businesses we've given tax breaks
to, what do we get as taxpayers in return? Another threat? When is
enough, enough?" asked state Rep. Mary Flowers, D-Chicago.
CME Chairman Terry Duffy said at a committee hearing Tuesday that
his company isn't seeking a handout from the state and isn't
threatening anyone.
"I would not be going through all this effort if we did not have
a commitment to stay here," he said. "I simply would have gone to
another state, accepted very lucrative proposals and moved our
firm."
The cost of the measure has increased to more than $500 million
annually by tacking on research and development tax breaks for
companies and tripling the earned income tax credit in hopes of
getting more legislators' support. The earned income tax credit is a
tax break for low-income and working-class families.
[to top of second column]
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To pay for all of this, lawmakers are looking at decoupling the
state from a federal tax code that allows businesses to get
deductions on capital investments all at once instead of over a
series of years.
"The framework for a good bill is out there; it just needs to be
rebalanced so you're not taking too much away from certain employers
in order to benefit others," said Todd Maisch, vice president of
government relations for the Illinois Chamber of Commerce, the
state's largest business association.
That move, however, would only generate $570 million in the first
year and $354 million in the second year before disappearing.
At the same time, the second-year cost of the tax incentives to
CME and Sears, plus tripling the earned income tax credit for
families, and offering research and development tax breaks for
companies around the state as outlined in the plan would go up to
$700 million.
David Vaught, Gov. Pat Quinn's budget director, said during a
committee hearing Tuesday that economic growth created by the
package would cover costs in the future.
If there isn't a corresponding economic growth, the burden of
covering the costs of the program will fall to the taxpayers of the
state, including Bohart and his business.
"I resent that, I resent that a lot," he said.
There are other businesses that could use the money from
decoupling more than CME and Sears, some argue. The state owes
between $4 billion and $5 billion in overdue bills to state vendors,
schools and small businesses that the state contracts with.
"They employ people, (and) we are doing nothing here by way of
paying any back bills," state Rep. David Harris, R-Arlington
Heights, said.
Advocates of paying off the state's old bills say doing so would
allow those owed to avoid furloughs, layoffs or even closing, thus
keeping tax revenue flowing into state coffers from those workers
and businesses.
[Illinois
Statehouse News; By ANDREW THOMASON]
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