Each time a corporation obtains a special tax break, that lost revenue must either be replaced, Illinois falls further into debt or public services are cut. All too often, lost revenue is captured through increased taxes on small businesses. We often hear political folks talk about small business being the engine that drives the economy. Accordingly, it is counter-productive for the State to provide tax breaks to large companies at the expense of small businesses. We all rely on one another to make the economy work. That’s why the SBAC is advocating for a level playing field where no company, large or small,would receive a tax break when one state is trying to lure a corporation from another.
The Organization for Economic Cooperation and Development (OECD) recently issued a study reviewing the Metropolitan Chicago tri-state region, consisting of 21 counties in Illinois, Indiana and Wisconsin. The OECD is a highly-respected international organization dedicated to promoting policies to improve the economic and social well-being of people around the world. While the study notes the region’s economic strengths, it finds that considerable challenges exist for the region to compete with other premier economic centers. Specifically, the report notes that offering tax incentives to lure a corporation from one state to another is self-defeating because it invites retaliation from other states. Further, the report urges state and local authorities and private-sector stakeholders in the Tri-State Region to cooperate more closely to promote innovation-driven economic development and job creation.
As we have seen, tax incentives do not ensure companies remain in the area after the incentive terminates and certainly do not ensure they create or even retain jobs. Accordingly, the SBAC drafted the Tri-State Metro Area Economic Development Interstate Compact Act earlier this month. The legislation, sponsored by Illinois State Representative Connie Howard, alters the economic development policy by establishing a framework for a three-state compact between Illinois, Wisconsin and Indiana. The compact prohibits the states from enticing large companies to relocate to neighboring states by offering them special tax breaks.
We hope to gain political support for this effort but first we must bring together small and mid-market business owners to form a strong coalition in support of this effort. Simply put, there is no justification for providing special tax incentives to large companies to keep them in Illinois or lure them from neighboring states. We all deserve a level playing field and small businesses are just as likely to create jobs as large corporations. We are excited about working with you to move this initiative forward!