I have written multiple times about the financial incentives Governor Pat Quinn has given to Illinois corporations to persuade them to either stay in Illinois or to add more workers. One would think that I am an econometrician! (Bit of KP trivia: I actually was an econometrician with Merrill Lynch years ago!) What a frustration it is to have to point out how the numbers don’t make sense! Now I have been vindicated by State Rep. Jack Franks (D-Marengo), the Chicago Tribune, and Crain’s Chicago Business in revealing the fine print in their contracts.
There will be economic justice for the taxpayers of Illinois!
There will be economic justice for the taxpayers of Illinois!
On May 10th, I wrote about the insanity of the $100 million that Quinn was giving Motorola Mobility over the next decade to stay in Illinois. Motorola Mobility did not pay one penny in corporate income tax, so the incentive money partially came from allowing Motorola Mobility to keep their own employees’ income tax withholding-- instead of turning it over to the state coffers.
On Monday, the Tribune reported, “What was not disclosed at the time is that the agreement specifically requires Motorola Mobility to retain a workforce here of 2,500 workers. The company disclosed in the contract that it employs 3,290 people at its locations in Libertyville and Chicago, which therefore allows it to reduce the size of its workforce and still get the credits.”
As Judge Judy always points out, an oral contract cannot supersede a written one. The fact that Quinn says the state has an "oral" agreement with Motorola Mobility to keep 3,000 jobs in Illinois is not worth the tongue it was spoken with.
How can I be sure of that? Because in 2003, Motorola, Inc.,(The original parent company to Motorola Mobility before that division was spun off in January 2011) took $36 million in financial incentives to upgrade their Harvard facility which employed 5,000 workers. After taking the money, they closed the plant.
Can you hear me now? How can the state trust Motorola Mobility?
Rep. Franks called the Motorola Mobility deal “outrageous” and called for all future economic and financial deals to be made public before they are signed off by the Governor. “If citizens knew that (Motorola Mobility) could fire 790 people and still get the tax credits, I don't think anyone would stand for that," he continued.
Since corporations are crying poverty because the State of Illinois raised the corporate income tax (which did not affect free-loading Motorola Mobility) as Franks said, “There is no benefit (to increasing the tax rate) if the governor keeps giving it away."
Is Motorola Mobility the only tricky company involved in getting money for “retaining” jobs that they might not keep? Guess what? According to Crain’s Chicago Business, “A $64.7-million state deal last September to keep Navistar International Corp. in Illinois lacks a guarantee that the truck and engine maker won’t cut jobs here.”
Crain’s also pointed out that, “In its application for state tax credits, Navistar said it employed 3,100 workers in four Chicago-area locations but planned to pare that number to 2,200, while hiring 400 more "over the next several years."
As Judge Judy always points out, an oral contract cannot supersede a written one. The fact that Quinn says the state has an "oral" agreement with Motorola Mobility to keep 3,000 jobs in Illinois is not worth the tongue it was spoken with.
How can I be sure of that? Because in 2003, Motorola, Inc.,(The original parent company to Motorola Mobility before that division was spun off in January 2011) took $36 million in financial incentives to upgrade their Harvard facility which employed 5,000 workers. After taking the money, they closed the plant.
Can you hear me now? How can the state trust Motorola Mobility?
Rep. Franks called the Motorola Mobility deal “outrageous” and called for all future economic and financial deals to be made public before they are signed off by the Governor. “If citizens knew that (Motorola Mobility) could fire 790 people and still get the tax credits, I don't think anyone would stand for that," he continued.
Since corporations are crying poverty because the State of Illinois raised the corporate income tax (which did not affect free-loading Motorola Mobility) as Franks said, “There is no benefit (to increasing the tax rate) if the governor keeps giving it away."
Is Motorola Mobility the only tricky company involved in getting money for “retaining” jobs that they might not keep? Guess what? According to Crain’s Chicago Business, “A $64.7-million state deal last September to keep Navistar International Corp. in Illinois lacks a guarantee that the truck and engine maker won’t cut jobs here.”
Crain’s also pointed out that, “In its application for state tax credits, Navistar said it employed 3,100 workers in four Chicago-area locations but planned to pare that number to 2,200, while hiring 400 more "over the next several years."
So if Navistar has 3,100 workers now and will have 2,600 later, why did they get money from Illinois to retain jobs? They are announcing that they will have fewer jobs than they currently employ.
Franks’ reacted to discovering the Navistar details by responding, “I think it’s bad public policy to use state tax dollars to subsidize the termination of Illinois employees, and that’s what it is; there’s no way to sugarcoat it.”
“If the public knew that corporations receiving multi-million dollar financial incentive packages could reduce their workforce by 10-20%, but still collect full tax credits – I do not believe they would stand for it,” Franks continued. “Public policy that permits state tax dollars to subsidize the termination of Illinois employees is painfully flawed and in need of oversight.”
Small corporations in Illinois who are actually paying the increased corporate tax rate have been victims of a financial injustice. Maybe Franks will bring some order to financial law in Illinois.
This governor is pathetic. He should go back to his Citizen Utility Board (CUB) days. At least he had a purpose then.
ReplyDeleteI'd love to have your brain...even just for a day!
ReplyDeleteSince the corporate tax revenue is such a small portion of state revenue, just eliminate the tax and put all businesses, large and small, on equal footing. Then maybe business will stay and expand in Illinois, bringing more individual income tax and sales tax revenue to fill the coffers. No more sweet deals needed - and small business will get a break.
ReplyDelete