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ILLINOIS
POLITICIANS SHOULD RESIST THE URGE TO RESUSCITATE FAILED EDGE TAX CREDIT
PROGRAM
Illinois Policy Institute
Illinois’ $1.3 billion in EDGE tax credits
has brought in only 34,000 jobs since 2001, and has enabled politicians
to hand out tax relief to select companies rather than lowering
anti-growth taxes for all businesses.
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 Illinois’ major vehicle for corporate welfare has been out of commission since
Dec. 31, 2016.
But a new proposal would revive the program through April 30. The chief sponsor
of the amendment to Senate Bill 513 is House Majority Leader Barbara Flynn
Currie, House Speaker Mike Madigan’s second-in-command.
The Economic Development for a Growing Economy, or EDGE, program has allowed
politicians to bestow $1.3 billion in tax credits since 2001.
The goal? Encourage companies to invest in Illinois, meaning more jobs for the
people who live here.
But EDGE’s success rate is abysmal.
The state’s $1.3 billion has brought in 34,000 jobs since 2001. But overall,
Illinois is down more than 100,000 jobs on net for this time period. In one
year, Illinois’ population lost more residents than EDGE attracted jobs over the
lifetime of the program. From July 2015 to July 2016, the state’s population
shrank by 37,500 people due to residents leaving for other states – the worst
out-migration loss of any state in the country.
Not only is the EDGE program a failure, but it is also a way for politicians to
pick favorites – usually large corporations.
From Jan. 1, 2014, to Oct. 31, 2014, the state doled out millions of dollars in
EDGE tax credits to companies including:
- Groupon ($8.4 million)
- Takeda Pharmaceuticals ($6.8 million)
- Ford ($5.5 million)
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What’s worse, for more than a decade, Illinois has been giving
select businesses many millions of dollars more in tax credits than
the law allows. The EDGE program is intended to provide an incentive
to companies to expand and hire more workers in Illinois, not to
reward companies for keeping existing workers.
But the Illinois Department of Commerce and Economic Opportunity, or
DCEO, has been giving tax credits to companies that simply retain
employees. The Liberty Justice Center has filed a lawsuit, Jenner v.
DCEO, which seeks to stop this illegal practice. The lawsuit alleges
it’s possible that as much as half of EDGE tax credits approved over
the life of the program violated the limits established in the law.
Additional incentives are only necessary when something is
unattractive. By backing the EDGE program, politicians implicitly
acknowledge that Illinois’ multiple layers of taxation and
regulation hinder job creation – yet the program only provides an
exemption from this financial strain to certain players in certain
sectors.
If Illinois politicians want sustainable jobs growth, lower taxes
should be applied across the board, not just to the politically
connected.
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