SEARS IS VERY CRAFTY!

The Associated Press, through a Freedom of Information request, discovered that 107 companies in Illinois have tax-breaks that will expire in 2012, 2013 and 2014.  Sears is part of that group so they are talking to other states to see which states will give it money as an incentive to relocate.  Very crafty move from the seller of Craftsman products!

When you think about it, the wheeling and dealing of the business climate in Illinois resembles a giant game of Groupon.  Groupon offers the customer an incentive to come and try their product at a highly discounted price.  The theory is that once the consumer samples the product, they will come back and pay full price.  That is how the retailer will cover the loss of luring the customer in.  Illinois has lured companies to come to the state by offering tax incentives, but now that the “Illinois Tax Groupon” is expiring, the customer does not want to pay full price!  They have tasted the grape of reduced taxes and want Groupon to continue.

That is the major flaw with the Groupon model.  Why should the customer come back at full price once it has experienced the service at half price?  Illinois has dug an economic hole for itself that is so deep, there is no ladder tall enough to reach fertile ground.

Crain’s Chicago Business reported, “A state spokeswoman said there is no set way for the Department of Commerce and Economic Opportunity to handle expiring tax incentive contracts. But she said the end of a deal isn't a guarantee of a new one.

“This is not an automatic ticket for a company to get additional incentives," Marcelyn Love said in an e-mail. “Our focus is on being responsive to companies so we can better assess their needs and make Illinois an attractive place to do business. If a company decides that they will be making additional investments and are interested in getting state assistance, then we would work with them.”

I wonder how long Love’s nose grew as she spouted those lies!  Illinois Governor Quinn has already said that he would work with Sears to try to keep them in the state.  Sears has not said it was planning to “[make] additional investments.”  It threatened to move to another sandbox if it did not continue to receive the same tax breaks.

Sears should move to another state and accept their “Groupon” tax benefits.  Then it should come back to Illinois in a few years for a giant payday.  The latest financial incentives Quinn has offered companies have been escalating as the months pass.  The tax breaks range from a per-job created low of $14,500 (Groupon in 2010) to $49,549 (Continental Tires the Americas) to the most recent JMC Steel Group Inc of $80,000 per job ($2 million for 25 jobs.) Now it is time to take out the calculator.

If Sears demands its incentive at the highest monetary amount that Quinn has doled out, then those 5,000 jobs the company has at its headquarters in Hoffman Estates are worth HALF A BILLION dollars to the company!  Even at the average per job incentive of $48,000 that still would reap Sears $240,000.000.

A smart corporation would move every few years to a new state and grab the best “Groupon Tax Incentive” it can get.  It is not fiscally wise to be a repeat customer when there is always another state that will offer a new “Deal of the Day.”