Illinois extends failed corporate tax credit program

Illinois extends failed corporate tax credit program

Gov. Bruce Rauner signed an extension of the EDGE tax credit program, though the program has an unsuccessful record of using taxpayer money.

Gov. Bruce Rauner signed a temporary extension of Illinois’ Economic Development for a Growing Economy, or EDGE, tax credit program Jan. 20.

The EDGE program expired Dec. 31, 2016, providing an opportunity to stop the practice of bribing corporations with taxpayer money. But House Majority Leader Barbara Flynn Currie, D-Chicago, sponsored legislation to revive it through April, which Rauner signed. The extension allows the state to engage in new EDGE agreements until April 30, whereas the previous expiration had halted any new deals from taking place.

EDGE’s purpose is to encourage companies to invest in Illinois. But it has an abysmal track record and has become a vehicle through which politicians can play favorites.

The state has spent $1.3 billion to bring in 34,000 jobs through the program since its creation in 2001. In its first year, the state doled out just $6.5 million in taxpayer money to corporations, but that number skyrocketed over the years, increasing by nearly $140 million under former Gov. Pat Quinn, especially as he used the taxpayer money as a political tool in advance of his 2014 reelection bid.

Despite adding 34,000 jobs, the state is down 100,000 jobs overall in that same lifespan of the EDGE program. The state lost more people between July 2015 and July 2016 than the amount of jobs the EDGE program has created in its 15-year lifespan.

The program’s record of failure should be enough to let it sunset – but in addition to failing to stimulate Illinois’ economy, EDGE has also doled out more money than the law allows.

Though the law states the program cannot be used to simply pay companies to keep existing workers, the Illinois Department of Commerce and Economic Opportunity, or DCEO, has been giving tax credits to companies just for retaining employees. The Liberty Justice Center filed a lawsuit, Jenner v. DCEO, to stop this illegal practice. The lawsuit alleges as much as half of EDGE tax credits approved over the life of the program possibly violate the law.

Since Rauner came into office this practice has apparently ended, the governor’s office has said. The lawsuit seeks to make that a permanent policy. Of course, ending the program altogether is an even better solution.

Instead of doling out favors to a handful of businesses, Illinois lawmakers should focus on fostering an economy that’s inviting to everyone. That means enacting structural, pro-growth reforms. Fixing its broken workers’ compensation system and freezing its highest-in-the-nation property taxes would be a start to making Illinois attractive for employers and competitive again in the region – all without using taxpayer money to play favorites.

Rauner should let this program end once and for all when it comes up again on April 30.

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