Gov. Pat Quinn is backing a review of tax breaks he and lawmakers have granted to nearly a dozen businesses the last several years, saying the state needs to take a comprehensive look at the incentives and must consider changing how much corporations pay in taxes.
Quinn’s comments came several days after Office Depot announced it had chosen Boca Raton, Fla., over Naperville for its headquarters following the company’s merger with Illinois-based OfficeMax. Office Depot had sought special tax breaks from lawmakers to stay in Illinois, but that planned stalled in the House last week.
On Friday, Quinn said he was “disappointed” in Office Depot’s decision, but questioned whether the incentives were a good use of taxpayer funds, saying the money would have been used to buy out a lease at the company’s Florida headquarters.
“I don’t know if that was good investment in taxpayer money in Illinois, so we were happy that it didn’t work out that way,” Quinn said during an unrelated appearance at chemical manufacturing plant on the city’s Southwest Side.
Despite granting several tax breaks to corporations in recent years, lawmakers have been become more vocal with criticism as more and more business of all sizes seek special deals. Critics have likened it to blackmail, and this week powerful House Speaker Michael Madigan, D-Chicago, railed against the deals saying it’s “difficult to support tax giveaways for corporate CEOs and millionaire shareholders whose companies pay little in state taxes.”
Quinn said he supported Madigan’s call to develop criteria to determine when it would be appropriate to give incentive packages rather than granting them on an one-by-one basis, and echoed concerns about the need to examine how much in state taxes corporations should pay.
“I think every so often it is good to take a step back and examine the whole process and look at the tax code,” Quinn said. “We want a tax code that encourages economic growth and jobs and fairness. And so this may be a very good opportunity in the coming year.”
Quinn did not elaborate on what kind of changes he’d like to see, but calling for tax “fairness” is not a new refrain for the populist governor. He’s previously backed a graduated income tax to replace Illinois’ flat tax, but also led Democrats in pushing through a 67 percent income tax rate increase in 2011. Portions of that hike are scheduled to being expiring in 2015.
Floating the idea that corporations need to pay more serves as political cover for the governor among working-class voters, particularly after his signature last week of a sweeping changes to the state’s employee retirement plans. The measure curtails benefits for active workers and retirees, and has drawn sharp rebuke from worker unions who say it threatens the middle class. Union groups are preparing a lawsuit to challenge the constitutionality of the law.
Doug Whitley, president and CEO of the Illinois Chamber of Commerce, said he supports the idea of revamping the state’s tax code, saying individual businesses seeking relief “is a symptom of a larger disease.”
“And that disease is that Illinois tax code is sufficiently bad that people are going and looking for one-off deals,” Whitley said. “But until we change the code so that are competitive… businesses will continue to come in and try to get some kind of special favor.”
Still, Whitley warned against placing too much focus on corporate income taxes, saying a broader approach is needed as Quinn and legislative leaders begin to weigh how to fill a massive budget hole that will be created if they let portions of the income tax expire as scheduled. Quinn has refused to say if he supports extending the tax, saying he will address that during upcoming budget negotiations.
“It’s easy for some people to grandstand and make political points over bashing business,” Whitley said. “I would make the argument that what we really need businesses to do is provide jobs and promote the economy, and taxing businesses isn’t going to help with that.”