Illinois gave Glassdoor more than $6M in tax breaks in 2016

Illinois gave Glassdoor more than $6M in tax breaks in 2016

Glassdoor agreed to three sets of hiring dates in 2016, 2017 and 2018 in which the job-finding website would hire 240 new employees.

In 2016, Illinois gave Glassdoor, the job-finding internet platform, more than $6 million in tax breaks. Glassdoor got the deal through the Economic Development for a Growing Economy, or EDGE, tax credit program.

The deal was formally executed Jan 28, 2016. In the agreement, Glassdoor agreed to three sets of future hiring start dates in exchange for a tax credit equal to $6.3 million. According to the deal, Glassdoor was to have 60 new hires by Dec. 31, 2016, 120 new hires by Dec. 31, 2017, and 240 total new hires by Dec 31, 2018.

The new hires were mostly white-collar employees, specializing in sales and engineering functions, and based out of Glassdoor’s Chicago location.

Glassdoor has an estimated value of about $1 billion and does not need special deals to set up shop in Illinois. But EDGE tends to favor larger, more politically connected companies than it does small businesses, creating a system where the state picks winners and losers. What’s worse is that Glassdoor is not the first large, web-based company to receive multimillion-dollar tax breaks through EDGE. Amazon, the internet retailer valued at $430 billion, received more than $112 million worth of tax credits in 2016.

Supporters of the program say EDGE has created tens of thousands of jobs and that Illinois is better off for having it, but this couldn’t be further from the truth.

EDGE has spent more than $1.3 billion since 2001, yet Illinois is still nearly 20,000 jobs short of the peak employment the state achieved in September 2000.

Though it expired April 30, EDGE is on course to return. House Bill 1125 would extend EDGE’s end date to May 31. HB 1125 passed the Illinois House overwhelmingly 107-3, and has arrived in the Senate. The primary sponsor is Senate President John Cullerton. The bill now sits in the Senate Assignments Committee where it is waiting to be directed to another committee.

This is not the first time Springfield has acted to save EDGE from going the way of the dodo. EDGE was supposed to expire permanently Dec. 31, 2016. But in January 2017, the General Assembly rammed through an extension for EDGE until April 30, 2017. Gov. Bruce Rauner signed the bill into law, giving EDGE a new lease on life.

Yet for HB 1125’s recent progress to becoming law, a longer-term replacement for EDGE currently sits in the Senate.

Senate Bill 2071, sponsored by state Sen. Pamela Althoff, R-McHenry, would create the Transforming, Helping, and Reviving Illinois’ Versatile Economy (THRIVE) Job Creation Tax Credit Act. If passed, THRIVE would become the primary tax credit program should EDGE be allowed to expire permanently.

Under THRIVE’s current provisions, companies that bring out-of-state employees into Illinois would be eligible for tax credits, as the transplanted workers would be counted as new hires. The credits would then be collected over a 10-year period, or 15 years if the company moves to a poor or heavily unemployed area.

EDGE has failed in creating jobs for Illinois, and companies that have benefitted from EDGE, like Glassdoor, have shifted their portion of the tax burden onto residents and businesses who don’t have the right political connections. On top of that, EDGE also tends to benefit larger companies over small businesses, giving corporations and large companies yet another advantage over small business owners. Corporate tax credit programs like EDGE incentivize companies who take advantage of this broken system to shop around for whichever place will give them the most tax credits. And this type of cronyism has even seeped into local government where midsize and even small municipalities have offered tax abatements to multi-billion dollar companies.

Rather than continue this ineffective and unfair system, Springfield should change course by making Illinois friendlier to all taxpayers and more competitive with other states for jobs. Bribing companies at the expense of the rest of the tax base will not and should not be the solution to Illinois’ economic problems.

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