Ill. Legislature Passes Business Tax Break

The Illinois General Assembly approved a tax-break package aimed at keeping Sears Holdings and others from leaving the state

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MELISSA BLOCK, HOST:

Now to Illinois, where Christmas appears to be coming a little early for Sears. Today, the Illinois Senate approved a big package of tax breaks and incentives. They'll go to the Illinois-based retailer and two other corporations.

As we hear from NPR's David Schaper, the goal is to keep them from moving out of the state.

UNIDENTIFIED MAN: All those in favor, signify by voting yes. Those opposed, vote no. The voting is open.

(SOUNDBITE OF A BELL)

DAVID SCHAPER, BYLINE: In their second try in a matter of weeks, the Illinois General Assembly approved a package of tax breaks and credits aimed at keeping three major employers from fleeing Illinois.

UNIDENTIFIED MAN: On this bill, there are 81 members voting yes, 28 members voting no, seven voting present. This bill, having received the constitutional majority, is hereby declared passed.

SCHAPER: Despite this lopsided margin in the Illinois House yesterday, the bill benefiting some of Illinois' best-known corporate residents didn't come to pass easily. The Sears Holding Corporation; the CME Group, which is parent company of the Chicago Mercantile Exchange in the Chicago Board of Trade; and a downstate company called Champion Labs all want tax breaks and credits to stay in Illinois, as other states are dangling lucrative tax-incentive packages to try to lure them away.

The bill's sponsor, State Representative John Bradley, acknowledges his colleagues are in a tricky spot.

STATE REP. JOHN BRADLEY: We are doing what we have to do, with this piece of legislation, to remain competitive in the Midwest, competitive nationally, and competitive in the United States.

SCHAPER: As part of a compromise, Bradley included tax relief for the working poor and the middle class. The package also includes tax credits for small businesses, and for research and development. But Democrat John Bradley says the bottom line is saving Illinois jobs.

BRADLEY: And it's not jobs in the abstract. These are people. These are people that go to work and pay their taxes, and get up in the morning and take care of their families.

SCHAPER: But Occupy Wall Street protesters briefly disrupted the debate, unfurling a banner in the Statehouse gallery, saying: Stop Corporate Greed. And many Republicans complain about what they say is the underlying reason some of Illinois' biggest corporate names are asking for tax breaks.

STATE REP. TOM CROSS: The reason we're here today - and there's no other way around it - is that the tax policy, and the increasing of taxes a year ago, did not work.

SCHAPER: Illinois House Republican Leader Tom Cross, commenting on the income tax increase pushed through by Democrats last January.

CROSS: We are going to, on a daily basis, start hearing from corporations - like Sears, and others - saying, we are going to leave because our policies make other states drool at the opportunity to come in here and grab our companies.

SCHAPER: But those who study the effectiveness of these state tax incentives to lure or keep corporations say it's often a zero-sum game. Peter Fisher is research director for the nonprofit Iowa Policy Project, and professor emeritus of urban planning at the University of Iowa.

PETER FISHER: I think we're undercutting the ability of the state to develop a workforce and an infrastructure that it's going to need for future economic growth - by giving away so much revenue.

But Fisher expects the competition between states trying to outdo one another by offering incentive packages to continue - because the political risk of losing one high-profile employer in this economy is too great.

David Schaper, NPR News, Chicago.

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