It's bad enough that pensions are draining Illinois dry; now Sears and others also want to

If Ohio wants to shower Sears Holding Corp. with $400 million to lure the retailer away from Hoffman Estates, I say, "Fine, do it." And let Ohio Gov. John Kasich (R) explain to his taxpayers why his state's bribe is four times greater than the $100 million that Illinois reportedly had offered.

But if I were a stockholder in Sears, I'd ask its board, have you lost your mind? Your stock, say some analysts, is underperforming; you're losing business to competitors, and last quarter's financials were disappointing. When you've got plenty of challenges just running the business, why are you even thinking about wasting precious time, money and energy moving? Think about the cost of everything — from printing new stationery and business cards to relocating or severing 6,000 employees, hiring new ones, transporting equipment and records, creating new business relationships and on and on.

Seems to me that your problem isn't so much where you are doing your job as how well you are doing it.

Of course, you're not the only one trying to extort money from taxpayers to stay. CME Group Inc., the giant derivatives marketplace whose Chicago roots, like Sears, go back more than a century, also wants taxpayer "assistance," even though it's already making a nice hunk of change. And Caterpillar Inc., the Peoria-based manufacturing giant, is shopping a new plant and its 1,000 jobs around the country to lure some serious coin from a willing state.

I can't blame them for wanting to flee Illinois, host of one of the nation's most unfriendly business climates, especially considering its recent corporate tax increase to 7 percent from 4.8 percent. It's especially apropos for CME, which pays an estimated 6 percent of all Illinois corporate income taxes. As a further inducement to leave, the Legislature unsuccessfully tried to agree to a package of tax breaks that would have, for example, halved CME's tax burden.

Honestly, if I were running a big business in Illinois while watching the clowns in Springfield driving the state into financial ruin, I'd also want to get out before the state's debt bubble bursts. This unfolding disaster isn't something that businesses can afford to watch from the sidelines. A good business climate requires more than a reasonable and fair tax structure; it also requires a sound infrastructure and a reasonable expectation that it will stay sound. Illinois can promise none of it.

Yet …

Talk about shooting the wounded. Coming now, the companies' demands are as untimely as extorting a blood donation from an intensive-care patient. Yes, the state put itself in the financial intensive care unit and yes, the corporate threats of moving might finally spur the clueless Democratic state leadership to finally clean up their mess.

But the corporate demands are shameless. They come at the wrong time. The state can no more afford to pay this kind of extortion now than it is able to immediately clear up its multibillion-dollar debt to the public employee pension funds.

As much respect as these companies deserve for their contributions to the state in the form of jobs, taxes and good corporate citizenship, it takes a lot of brass and a startling disregard of the commonweal to make such demands now. It is one thing to clamor for a good business climate as the price for staying, but it's entirely another thing to demand special consideration when the state can't pay its bills to schools, hospitals and everyone else.

The line of companies whose demands for taxpayer largesse seems endless. Motorola Mobility Holdings copping $113.7 million in tax credits over the next decade, $1.25 million in training funds and a $3 million grant to retain 2,500 jobs. Chrysler in Belvidere. Mitsubishi Motors to come and stay in Bloomington-Normal for a mere $276.1 million.

Sears, you'll recall, originally squeezed a taxpayer-subsidized incentive package to move from the former Sears Tower in Chicago to Hoffman Estates. That deal is about to expire and Sears now wants more. If we give it to Sears, why, we can ask ourselves, won't it happen again? And again. And again.

We'd welcome these companies if they stayed and helped us see Illinois through these tough times. But for now, no deal. Even in return for big employment, tax and other benefits for Illinois in the future. We're bust, don't you see?

This column first appeared in the Chicago Tribune.


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  • I strongly agree with your first point about Sears - the cost of moving and relocating key employees (particularly in this housing market) has to be extremely expensive. Replacing those that choose not to relocate with new employees from the new locale will also be costly and challenging. It makes a thinking person wonder if this is all just a bluff.

    I also agree with you about the timing of Sears and other companies with their extortion efforts. Sure, they owe it to their shareholders to try, but do they really think it's in their best long term interests to bankrupt the state that educates its employee pool and provides the infrastructure necessary to conduct business?

    Yes, Illinois' infrastructure requires improvement. But we still have our central location, O'Hare, expressways, and public transportation to improve on, rather than starting from scratch. Try getting direct flights in and out of some of the poaching states or achieving 3-day shipping anywhere in the country from their non-central locations.

    Don't sell the standard of living in the 6-county area short, either. Chicago is a world class city - Columbus, Cleveland, Cincinnati, not so much. That has value for attracting top talent. Our suburban schools are also big draws.

    I must take issue with the continued assertion that our corporate tax rate creates an unfriendly business environment. It would be interesting to analyze just how much corporate profit Illinois businesses are reporting and how much the increase will actually impact their bottom lines. Nominal rate hikes are meaningless in a world of creative accounting practices.

    In the days of high nominal tax rates, business owners had more incentive to reinvest money into growing their companies - buying new equipment, upgrading facilities, hiring more people. When the choice is paying more money in taxes or using the same amount of the tax payment to improve the company, which one do you think management will choose? Illinois wins either way in that scenario.

    The ideology that continually equates the lack of a financial incentive as an insurmountable disincentive is a logical fallacy. Tax policy can be neutral. Perpetuating this myth gives corporations the idea that their fair share of tax contributions is as negotiable as a lease. As taxpayers, why offer something - lost tax revenue - in exchange for nothing that is of equivalent value or even tangible?

    Companies can't ever hold up their end of this type of agreement, as they can't guarantee to keep people employed or even keep their doors open. (Note Motorola dropped to their minimum employee count before the ink even dried)

    As taxpayers, we can't reclaim our lost revenues from an entity that no longer exists. Our legislators fail in Negotiation 101 when they feel compelled to negotiate with the equivalent of an economic terrorist. Particularly when this willingness to give-in only encourages more terrorists to line up and hold us hostage until they secure their own ransom.

    Our legislators would do better just by calling someone's bluff and letting their board decide whether or not moving is in the company's best interest. If they go, they went because they didn't have a strong company to begin with. From that point on, we'll make a statement to not even bother coming to the state house with your hand open.

    Beat your tax increase by reinvesting in your company. You don't get rewarded for carrying on business as usual. Do something that will improve the state's economy and employ more Illinoisans and then we'll talk.

  • Because of the high sales and real estate taxes, I
    plan to move out of Illinois.

    How much will the State of Illinois pay me to stay?

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