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Taxes Wed Dec 21 2011
Give Em An Inch, They Tax Break All Over You
This week Governor Quinn signed into law special tax incentives for the insanely profitable Chicago Mercantile Exchange and the poorly run Sears. The Associated Press offers a sort-of warning: that scores of companies have tax "packages" that are to expire over the next few years. If you are a shareholder in any of those companies, would you expect anything less than threats to relocate from your CEO? And if you're a government affairs person representing a business in Springfield, what would your attitude be towards a legislator who voted for this tax package but won't put forward one for you?
I never bought for a minute that CME and Sears were actually going to leave. Nor do I suspect that Mayor Emanuel, who helped engineer the cuts for CME, or most of the legislators who voted for the cuts, actually bought the threats either. But the threat to leave is a formality that gives cover to politicians who want to hand their political supporters a nice plum but want to obscure the quid pro quo. Seeing now that the tactic works, we should fully expect a tidal wave of employers demanding incentives to stay in the state.
You know, if we cut our tax rates to 0%, we'll get all the businesses. All the businesses!
The good news, as far as it goes, is that CME at least is in a pretty unique sectors and dominates its market in the state, so there is a superficially rational argument for why they should receive breaks but nobody else should. But as the Daily Herald reports, Community Unit School District 300 is going to be feeling some hurt for a generation thanks to the cut for Sears. If legislators are willing to make trades like that, it isn't clear where or why they'll draw a line.
Pete / December 21, 2011 1:27 PM
CME is indeed a unique situation and a highly viable business, so that tax break I can understand. But I don't get giving a big handout to Sears, a poorly-managed dinosaur that might be out of business in a few years anyway.