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Our View: Business deals the wrong fix

Published: Tuesday, Nov. 5, 2013 5:30 a.m. CDT • Updated: Tuesday, Nov. 5, 2013 12:47 p.m. CDT

State lawmakers return to Springfield on Tuesday for the final days of the fall veto session.

While pension reform is the elephant in the room, legislators could take up a list of tax breaks and other incentives to keep businesses in Illinois or attract new ones to the state.

Such is the way the game is played in business-unfriendly Illinois. From the corporate tax rate to high property taxes to regulatory burdens, Illinois’ business climate is a cold one.

Last month, the smaller-tax think tank Tax Foundation released its 2014 State Business Tax Climate Index. Illinois ranked 31st overall in being business friendly. That’s down from 15th in 2011.

Overall, Illinois ranks 47th in corporate taxes, 33rd in sales taxes, 43rd in unemployment insurance and 44th in property taxes.

So it’s no surprise that businesses seek incentives to remain or come to Illinois. Among the deals that could come up during this week’s session in Springfield:

• Illinois lawmakers put together a $24 million incentives package for Archer Daniels Midland to keep its world headquarters in the state. ADM is leaving Decatur, but could relocate to Chicago.

• Nobody is saying how much OfficeMax is requesting to keep its headquarters in Naperville after its merger with Office Depot is complete instead of relocating to Florida.

• Zurich North America insurance wants a payroll tax break in exchange for relocating its Schaumburg offices to another location in Schaumburg.

• Univar, a chemical distribution company based in Redmond, Wash., is seeking incentives worth $5 million to move its headquarters to Downers Grove.

In almost all of these deals, part of the agreement is to create more jobs. That’s a good thing.

These business-by-business negotiated deals, however, are a bad thing for Illinois and are unfair to other businesses, particulalry small businesses, which represent a large part of the economy. Continuing to give some big employers major tax breaks while not doing the same for others is not a viable long-term solution for Illinois’ poor business climate.

For Illinois to really compete with other states – and countries – for jobs, it must take a hard look at tax reform. As soon as it tackles that elephant in the room.

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