Gov. Quinn, “I am going to move to Indiana unless you give me money!”

 

Last week, the State of Illinois gave Motorola Mobility tax credits worth $100 million over the next 10 years not to move to another state.  To get this pot of money into Motorola’s coffers, Illinois Governor Pat Quinn signed legislation that changed how the state’s Economic Development for a Growing Economy (EDGE) tax-credit program works.  The deal astounds me!

Normally EDGE provides tax-credits for companies that are used towards paying their state corporate income tax bill.  But what if your company is very clever, has great accountants, knows every loop hole and doesn’t pay any corporate income tax?  In 2009, Motorola Mobility had NO CORPORATE TAX liability!  Well, it would seem this program would not be for Motorola. Au contraire, my naïve blog friends.

What Quinn did was add an option to EDGE and allow Motorola to use the tax credits towards paying their employees’ personal state income tax withholding liability.  So not only are the taxpayers of Illinois now not getting the benefits of the personal state income tax of employees, the employees are funding the $100 million their company is pocketing.

What is also so incredible about this deal is that Quinn pushed hard to get the state personal income tax raised from 3% to 5% and is now using that money and giving it back 100% to a corporation instead of it going to the state treasury!!

The Chicago Tribune reported that, Greg LeRoy, executive director of Good Jobs First, a nonprofit that researches economic development subsidies, called the diversion of personal income tax revenue “an insidious recent development. It is like companies grabbing into employees' pockets.”

Understandable example:

Employee weekly paycheck-- $1,000

Illinois State Income tax 5%- $50

Normally a company would have to send that $50 to the state as withholding.  But, in this case, it’s not.  Quinn is allowing Motorola Mobility to keep it!  So the employees are funding the company!

If we divide the $100 million that Motorola is receiving that is about $34,750 for each of the 3,000 employees based in Libertyville.  According to the Chicago Tribune, this is, “considerably more than the $15,000 to $20,000 per job that is more typical when the state awards tax credits to keep or attract businesses.”

The Tribune also reported that “This is not the first time a Motorola company has received government incentives. In 2003, Motorola Inc. closed a plant in Harvard that employed 5,000 people. The cell phone plant had been the recipient of $36 million in government incentives, mostly in the form of road and infrastructure upgrades to support the facility.”

What??  They received $36 million in incentives and then closed the plant?  Who wrote up that contract?  Why didn’t it say if they took the money, they had to stay?

I have decided to move to Indiana unless I receive some monetary incentive to stay.  I help raise hundred of thousands of dollars each year for Illinois not-for-profits.  If I did not raise that money, the state would have to provide more funding.  I want $34,750 (the same subsidy paid Motorola per employee) or I will be calling Allied Van Lines. Who else is with me?

By the way, did I mention that the Daily Herald says that Motorola Mobility Chief Executive Officer Sanjay Jha lives in San Diego, California?  Thought you would like to know.