Rauner signs bill reinstating business tax credit program
A controversial but politically popular tax credit program will be extended until June 2022 under a bill signed by Gov. Bruce Rauner.
With the stroke of a pen, Gov. Bruce Rauner has brought back a controversial and expensive corporate tax credit program.
House Bill 162, made Public Act 100-0511 by Rauner’s signature on Sept. 18, revives the Economic Development for a Growing Economy, or EDGE, tax credit program and extends it until June 30, 2022.
EDGE expired April 30, 2017, though it had an original expiration date of Dec. 31, 2016. However, in January 2017, Rauner and the General Assembly brought back the program for a brief, three-month term.
Since 2001, the Illinois Department of Commerce and Economic Opportunity, or DCEO, has issued more than $1.4 billion worth of EDGE tax credits to select companies.
The new law makes some changes to EDGE, such as giving greater tax credits for projects in underserved areas, and allowing certain EDGE applicants who have met hiring goals under the program to get increased tax credits for retaining employees.
Public Act 100-0511 limits credit awards to the lesser of 50 percent of the incremental tax attributable to new workers plus 10 percent of new employee training costs, or 100 percent of the incremental income tax attributable to new employees at an EDGE applicant’s project.
In its 2016 report concerning EDGE, DCEO said that since 2001, the state awarded $1.4 billion worth of EDGE credits in 859 agreements. DCEO also stated the program had created 37,122 jobs as of Dec. 31, 2016.
However, the big-picture results of this massive state investment have been dubious, as Illinois’ jobs growth has been poor even with EDGE in effect. Between June 2016 and June 2017, Illinois’ jobs growth was 40 percent slower than the national average and slower than all of Illinois’ neighboring states.
Beyond jobs numbers, it’s also difficult to argue EDGE has helped the pocketbooks of average Illinoisans. From 2007 to 2016, Illinois tied with Nevada for the worst personal income growth in the United States.
Despite these results, EDGE remains a popular, bipartisan program at the Statehouse. HB 162 passed the Illinois House of Representatives on a 102-5 vote, and didn’t receive a single “no” vote in the Senate.
If lawmakers want to see lasting jobs growth, they should look at pro-growth policies such as workers’ compensation reform or comprehensive property tax reform. Signing agreements with select companies to hire and retain employees, one deal at a time, is no way to sustainably grow a state economy.
Instead of favoring a chosen few, lawmakers should extend the logic behind EDGE – that lower tax burdens drive jobs growth – to all businesses in the state.