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ONE OF
ILLINOIS’ TOP TAX CREDIT RECIPIENTS TO SHUTTER 1,000-EMPLOYEE HQ
Illinois Policy Institute/
Austin Berg
Illinois issued more than $60 million in
EDGE tax credits to Takeda Pharmaceuticals from 2003 to 2013, more than
any other company received over that time.
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 Takeda Pharmaceuticals announced Sept. 10 plans to close its
U.S. headquarters in Deerfield, Illinois and continue consolidating its
operations in Boston, according to Crain’s Chicago Business. The Deerfield
office houses around 1,000 employees.
The biopharma company’s decision to shutter its Illinois-based headquarters
comes despite having enjoyed one of the most lucrative tax credit arrangements
in the state, calling into the question the efficacy of Illinois’ Economic
Development for a Growing Economy, or EDGE, tax credit program.
From 2003 to 2013, Illinois issued more than $60 million in EDGE tax credits to
Takeda via two separate agreements, according to documents obtained from the
Illinois Department of Commerce and Economic Opportunity. In exchange, the
company promised to create 566 new jobs.
No other company in the state received more EDGE tax credits over that time.
Gov. Bruce Rauner’s administration in 2017 pushed to replace EDGE with a
reformed economic development program called Transforming, Helping, and Reviving
Illinois’ Versatile Economy, or THRIVE. Proposed reforms included:
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Reducing the credit amount available to businesses
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Reserving tax credits for jobs created, rather than jobs
retained
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Changing the tax credit threshold to allow more businesses
to claim them, rather than unduly advantaging large businesses
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Making tax credits transferable
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Instituting a more aggressive claw-back mechanism to
reclaim credits, should a company choose to leave the state
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The General Assembly adopted just a few of the
administration’s proposed changes when they renewed the EDGE program
in August 2017.
Many states have tax credit and business incentives programs similar
to EDGE. However, there is scant evidence that these programs, which
often simply shift the tax burden onto nonparticipating businesses,
spur broad growth.
A 2017 report by the W.E. Upjohn Institute for Employment Research
shows state and local business incentives programs for export-base
industries (industries selling goods and services outside the local
economy) cost the U.S. $45 billion in 2015. Moreover, the study did
not find a significant correlation between incentives programs and a
state’s current or past unemployment or income levels, or with
future economic growth.
A CityLab analysis of the Institute’s study noted that many state
programs continue awarding incentives to companies regardless of
whether they reach jobs projections, which only prolongs the failure
of these programs.
Instead of handing out tax breaks to the few, state lawmakers would
be wise to focus on passing reforms that lower Illinois’ heavy tax
burden for all.
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