Illinois politicians should resist the urge to resuscitate failed EDGE tax credit program

January 8, 2017
By Hilary Gowins

Illinois’ $1.3 billion in EDGE tax credits has brought in only 34,000 jobs since 2001, and has enabled politicians to hand out tax relief to select companies rather than lowering anti-growth taxes for all businesses.

Illinois’ major vehicle for corporate welfare has been out of commission since Dec. 31, 2016.

But a new proposal would revive the program through April 30. The chief sponsor of the amendment to Senate Bill 513 is House Majority Leader Barbara Flynn Currie, House Speaker Mike Madigan’s second-in-command.

The Economic Development for a Growing Economy, or EDGE, program has allowed politicians to bestow $1.3 billion in tax credits since 2001.

The goal? Encourage companies to invest in Illinois, meaning more jobs for the people who live here.

But EDGE’s success rate is abysmal.

The state’s $1.3 billion has brought in 34,000 jobs since 2001. But overall, Illinois is down more than 100,000  jobs on net for this time period. In one year, Illinois’ population lost more residents than EDGE attracted jobs over the lifetime of the program. From July 2015 to July 2016, the state’s population shrank by 37,500 people due to residents leaving for other states – the worst out-migration loss of any state in the country.

Not only is the EDGE program a failure, but it is also a way for politicians to pick favorites – usually large corporations.

From Jan. 1, 2014, to Oct. 31, 2014, the state doled out millions of dollars in EDGE tax credits to companies including:

  • Groupon ($8.4 million)
  • Takeda Pharmaceuticals ($6.8 million)
  • Ford ($5.5 million)

What’s worse, for more than a decade, Illinois has been giving select businesses many millions of dollars more in tax credits than the law allows. The EDGE program is intended to provide an incentive to companies to expand and hire more workers in Illinois, not to reward companies for keeping existing workers.

But the Illinois Department of Commerce and Economic Opportunity, or DCEO, has been giving tax credits to companies that simply retain employees. The Liberty Justice Center has filed a lawsuit, Jenner v. DCEO, which seeks to stop this illegal practice. The lawsuit alleges it’s possible that as much as half of EDGE tax credits approved over the life of the program violated the limits established in the law.

Additional incentives are only necessary when something is unattractive. By backing the EDGE program, politicians implicitly acknowledge that Illinois’ multiple layers of taxation and regulation hinder job creation – yet the program only provides an exemption from this financial strain to certain players in certain sectors.

If Illinois politicians want sustainable jobs growth, lower taxes should be applied across the board, not just to the politically connected.