Illinois' business climate encourages the kind of tax-subsidy-seeking game that taxpayers prefer to avoid.
A bidding war was quick to begin after Archer Daniels Midland recently announced tentative plans to move its corporate headquarters out of Decatur and into a major metropolitan area with access to an international airport.
The consensus initially was that ADM planned to move to Chicago. But St. Louis has expressed interest, as has Minneapolis. Major cities all across the country will be vying to be the new home for this corporate powerhouse (last year's sales were $89 billion). So it's no surprise that the company is playing its cards close to the vest about its plans.
For the time being, it plans to ask its potential hosts to make an offer. In other words, Illinois, among others, will be playing the tax-subsidy game once again, because it defaults to that approach as the only way to compete.
"Look, that's the game we're in. You have to play. Every state can offer incentives," said Illinois Senate President John Cullerton, a Chicago Democrat.
It's pretty clear that ADM made its moving plans known to certain important people well before its recent announcement. If not, how could state Rep. John Bradley, a member of House Speaker Mike Madigan's leadership team in the Illinois House, have come up with a 48-page bill awarding ADM roughly $20 million in subsidies so quickly?
If not, how could ADM and two other companies — Zurich, a Swiss insurance company, and Redmond, Wash.-based Univar Inc. — have arranged to appear at a legislative hearing this week to press for passage of the proposal that would provide them credits against their payroll taxes?
If not, how could ADM have managed to hire Chicago lawyer Mike Casper, who is tight with Speaker Madigan and majority Democrats in Springfield, to argue its case before the legislative panel?
It's pretty clear what's up. But House Majority Leader Barbara Flynn Currie spelled it out for those too dense to discern.
"It essentially is blackmailing the state. It essentially is saying, if you don't jump, if you don't do this for us, we might think about going somewhere else," she said.
Exactly. What's on display here is another example of heavyweights using their size and leverage to acquire tax benefits denied to those who lack the necessary clout. Recent examples of this kind of shakedown include Motorola and Sears.
ADM and the others are just doing what comes naturally. But Illinois encourages this kind of approach with an unfriendly business and tax climate that overtaxes the small and the weak while allowing those who are large and strong to negotiate generous tax subsidies.
Why not replace that inequity with a balanced system that lowers costs for all businesses in a way that would encourage existing businesses to stay and expand and new businesses to come here? It wouldn't eliminate all the corporate efforts to pursue tax subsidies, but it would dramatically reduce the financial incentives for them to do so.
According to ADM's announcement, it plans to move its world corporate headquarters from Decatur to a major metropolitan area. Its North American corporate headquarters would remain in Decatur.
The move would involve about 100 people. The company also intends to create a new information technology center that would create an additional 100 jobs.
It's asking Illinois for $1.2 million in subsidies a year for as long as 20 years if it moves to Chicago, and it's a fair bet ADM's request will be granted. After all, the bidding war is on, and, as Cullerton said, "you have to play."
But his premise is flawed. Illinois has to play because its corporate tax and business climate is hostile to job creators, the largest of which win exemptions by threatening to leave. Wouldn't everyone in Illinois — the people who want jobs, the people who create jobs — be better off it they like it here so much that it would be unthinkable to leave?