Amazon received more than $112 million in EDGE tax credits in 2016
In exchange for more than $112 million in tax breaks, Amazon promised to expand its Illinois operations and hire 7,200 new employees in Aurora, Monee and Joliet.
Amazon.com received more than $112 million in tax breaks from Illinois’ tax credit program, the Economic Development for a Growing Economy, or EDGE, in 2016.
The ecommerce giant, currently valued at $430 billion, had three separate EDGE deals with the state in 2016. Under the terms of the three deals, Amazon promised to create 7,200 jobs at facilities in Joliet, Aurora and Monee.
The first deal was signed July 22, 2016. Under the terms of the agreement, Amazon pledged to expand operations at its Joliet fulfillment center by hiring 1,500 new employees and promising an unknown capital investment by May 24, 2017. On top of that, Amazon also agreed to open a second fulfillment center in Joliet slated to create 2,000 new jobs by April 19, 2018. Though the timeframe and precise amount was redacted from the EDGE agreement with Amazon, the DCEO lists the estimated value of the credit for the Joliet deal at $71.5 million.
The other two deals were reached Dec. 15, 2016, just two weeks before the EDGE program initially expired. Under the deals, Amazon agreed to open fulfillment centers in Aurora and Monee, with the Monee facility scheduled to create 2,500 new jobs by May 2018 and the Aurora center to create 1,200 new jobs by October 2018. Amazon received a tax deal worth more than $27.8 million for the Monee agreement and more than $12.89 million in tax breaks for the Aurora agreement.
And the tax breaks didn’t just end with EDGE.
Amazon was wooed at the local level as well. The city of Aurora gave Amazon a property tax abatement worth $400,000.
While some praise EDGE, there is no evidence the program has been effective. The Department of Commerce and Economic Opportunity claims EDGE has created 34,000 jobs, but since the turn of the century Illinois has lost 300,000 manufacturing jobs, and Illinois’ workforce has contracted by 170,000 since its peak before the Great Recession. And despite the fact Illinois spent more than through EDGE since the program began in 2001, the Commission on Government Forecasting and Accountability’s March 2017 report shows that Illinois state revenues are declining, a sign Illinois may be on the brink of recession. Illinois’ massive tax burden and its anti-growth policies are fueling this exodus of people. EDGE will not fix Illinois’ jobs environment. Since Amazon’s announcement of its plan to build in Aurora, other large employers have left. In April 2017, Caterpillar announced it was closing the machine production plant portion of its Aurora facility, costing the city 800 well-paying jobs, proving that taxpayer-funded favors to handpicked companies will not make a municipality or state more competitive for attracting jobs.
However EDGE’s proponents are fighting to continue and revitalize the program. Though EDGE was extended in January 2017 after it briefly expired, EDGE’s extension runs out April 30, meaning that if nothing is done, EDGE will expire for good. Currently, two proposals are on the table to revamp EDGE. House Bill 2744, supported by the Illinois Chamber of Commerce and sponsored by State Rep. Michael J. Zalewski, D-Riverside, would transform EDGE into the Business and Employment Development Tax Credit Act. The measure would cap credits to $50 million a year and set a five-year duration for each credit and would allow the new tax credits to be given to companies that retain workers, which is illegal under current law. HB 2744 also contained no sunset provision, meaning that unlike EDGE, the law wouldn’t expire and would be permanent. Fortunately for taxpayers, HB 2744 may never see the light of day as it has been re-referred to the dreaded House Rules Committee, a prolific legislative graveyard where bills go to die.
The other measure, Senate Bill 2071 sponsored by state Sen. Pam Althoff, R-McHenry, would rebrand EDGE as the Transforming, Helping, and Reviving Illinois’ Versatile Economy Job Creation Tax Credit Act, or THRIVE. Under this reincarnation of EDGE, credits would only be applied to new hires and collected over 10 years, or 15 years if the company locates to a poor or heavily unemployed area. But under SB 2071, the new hires don’t have to actually be from Illinois, as companies moving in from out of state that bring along full-time employees are considered to be new employees for the purposes of the law. SB 2071 currently sits in the Senate Revenue Committee where it has been postponed and a new May deadline has been established, giving the Senate Revenue Committee more time to consider the bill.
The General Assembly should dismiss these proposals. EDGE is not only ineffective but is also bad for taxpayers. When leaders at both the state and local level give sweetheart tax deals to multibillion-dollar corporations like Amazon, they put Amazon’s share of the tax burden onto everyone else. Lawmakers at the state and local level should seek real reforms that make Illinois more affordable for taxpayers and more competitive for jobs, not engaging in corporate welfare.