Illinois Scrambles as Sears Looks for an Exit
Two weeks ago, I noted that our cross-border friends in Illinois had an economic mess on their hands. Unemployment’s high and the budget is out of whack. But tax increases rather than budget cuts constitute the fiscal front line in Illinois: taxes on Internet sales, and tax hikes on income, on wealth-creating enterprises, and on enterprisers that make Illinois prosper.
The result? A schizophrenic tax and tax-break policy that has business looking for the exits. The latest: Sears.
Sears Holdings Corp.’s confirmation Monday that it is considering leaving Illinois could push the fiscally crippled state to dole out incentives to another major company.
In 1989, Sears leveraged the possibility of moving to North Carolina to earn tax breaks that led it to leave Sears Tower (now Willis Tower) in the Loop for its Hoffman Estates campus, said Hoffman Estates Mayor William McLeod.
[...]
The threat looms large: Sears, a 125-year-old mail-order pioneer and retail institution, is the Chicago area’s fourth-largest publicly traded company by revenue ($43.3 billion in fiscal 2010). The parent of Sears and Kmart employs 280,000 in North America, including 6,200 at its 200-acre Prairie Stone campus.
Tax-credit mania!
The article continues (emphasis added):
The news follows Illinois’ $7 million tax credit to keep U.S. Cellular Corp., a $19 million tax break to Continental Tire, $65 million in tax breaks to keep Navistar and $100 million in tax incentives to retain Motorola Mobility’s Libertyville headquarters. Gov. [Pat] Quinn also scrambled to assure Caterpillar that Illinois is a business-friendly state.
One of the best ways to assure businesses that your state is “business-friendly” is to establish low, stable tax rates that don’t punish hard work or pick winners and losers. Tax increases aren’t the answer, and the list of states to which Sears might move — Georgia, New Jersey, North Carolina, South Carolina, Tennessee, and Texas — are mostly the usual, business-friendly suspects, some of whom may literally be laughing at Illinois’ economic policies all the way to the bank. For example, Illinois now applies a 5-percent income tax rate (formerly 3 percent) against its residents; Tennessee and Texas don’t even have an income tax. Under those conditions, where would you rather live and work?
But, Missourians, do note: Our income tax rate settles in at 6 percent. Missouri’s leaders haven’t written off fiscal discipline entirely, but the state’s income tax probably ought to be revisited sometime soon. Food for thought.
But what’s the overall tax rate per state? I don’t care what the income tax rate alone is, if property tax, sales tax, license fees and more just take it back.
Comment by Mark — May 10, 2011 @ 2:01 p.m.
@Mark That’s a very fair point, although defining an “overall tax rate” depends on a lot of factors and assumptions (corporate? individual? etc.). Here’s one analysis you might find helpful, though there are lots of similar analyses out there: http://goo.gl/bNo5J (appears to be a few years old)
But even without getting into the weeds of defining total tax burdens, let me pose a question that may get us where we want to go: Do you think Sears would move to a state where it’d be in a worse business/tax situation than it’d be in if it stayed in Illinois? All the factors that you’re interested in — licensing, property taxes, etc. — are likely being considered by Sears’ management.
Comment by Patrick Ishmael — May 10, 2011 @ 3:51 p.m.
Sears – come to Florida!
We have much better weather, lower housing prices, no state income taxes, and NO UNIONS!
Comment by weew — May 10, 2011 @ 10:32 p.m.
“6,200 at Sears 200-acre Prairie Stone campus.” What do they all do? If Sears wants to save money, they should take a sharp look at that corporate HQ headcount! Too many chiefs.
Comment by gp — May 10, 2011 @ 11:19 p.m.
Illinois has become the laboratory of Democrat policies of high taxes, out of control spending and large budget shortfalls. The loss of businesses to lower tax states mirrors the loss of businesses in the United States to other countries with lower corporate tax rates. The United States currently has the highest corporate rate(35%) after Japan lowered their rate. Canada has also lowered their rate,
Comment by James — May 10, 2011 @ 11:33 p.m.
How long will these tax credits look attractive when you can probably assume the state will find other ways to squeeze the companies and the people that work for them. These companies ought to move out even if offered the tax credits or whatever bribes the state comes up with. If enough companies do that, the message will be sent loud and clear. Maybe Washington might even pay attention…nah.
Comment by Andy B — May 11, 2011 @ 12:24 a.m.
Bail out. It will only get worse.
Comment by pat — May 11, 2011 @ 1:28 a.m.
Illinois seems to be trying out the California model in destroying its economy & tax base.
Comment by Old One — May 11, 2011 @ 3:01 a.m.
@gp, You’re right, they should start getting rid of the leftists executives that have kept them in such a screwed up state for so long.
So telling that your instinctual reaction to the size of their campus is negative. As if that is not something all Americans should celebrate.
Comment by pj — May 11, 2011 @ 3:35 a.m.
Welcome to Texas
Comment by timt223 — May 11, 2011 @ 3:44 a.m.
I really don’t see any difference between unions, government, or the Mafia anymore…
Comment by Fuzzlenutter — May 11, 2011 @ 4:28 a.m.
High taxes are never an answer.
Number 1: BAN UNIONS
Number 2: Base taxes on SALES not INCOME (like Tennessee)
It’s not fair that people paying state income taxes can deduct those taxes from their Federal returns; this results in all of us subsidizing them! I have been working 41 yrs and have never filed ‘long form’ and it’s not fair that some get deductions for these taxes or home mortgage interest but I can not.
FLAT RATE TAX is the only fair tax.
Comment by JEB — May 11, 2011 @ 4:41 a.m.
Sears, do yourself a favor – Come to Texas! Your employees will love you for it! Hopefully, one day Texas will gain its independence again from the Nanny Federal State!
Comment by Mark C — May 11, 2011 @ 5:19 a.m.
[...] She needn’t have bothered. Businesses have noticed: [...]
Pingback by Bloodthirsty Liberal » There Must Be Some Way Out of Here — May 11, 2011 @ 5:27 a.m.
Spend first, buy their votes and don’t even worry how you’ll take it back from the idiots until after you get their vote and your power. Be creative, tell them what they want to hear. Tickle their willing ears, and then when they get mad because it doesn’t, it can’t, work, do what always works – blame the other guys.
We’ve fallen off the precipice of sanity. What magnificance we’ve destroyed with our hedonism, our eager self-deceit, our envy, and our greed have done in this Nation – a nation without “Nature’s God” any longer as it’s Compass.
Comment by Don L — May 11, 2011 @ 5:36 a.m.
Every tax break given to company A, B or C has to be made up from somewhere. The old saying “there is no free lunch” still applies. Illinois is not going to cut spending by the amount of the tax break; they just have to raise someone elses taxes to make up for it.
Larr
Comment by Larr — May 11, 2011 @ 5:44 a.m.
Hey Sears,
Come to Tennessee, we’ve got a big, ole, empty Saturn plant just waitin’ for ya.
Comment by Southerngirl58 — May 11, 2011 @ 5:58 a.m.
Howdy, Sears! Y’all come to Texas. We ain’t fixin’ to steal what’s rightfully yours.
Comment by Earl — May 11, 2011 @ 7:01 a.m.
Ditto on Florida – Sears welcome to the friendly sunshine state.
Comment by Insanity — May 11, 2011 @ 7:32 a.m.
Come to Louisiana…our rates are low, property tax is reasonable, and we’re a right-to-work state.
Comment by Louisiana Steve — May 11, 2011 @ 7:38 a.m.
Sears, come to Texas. Promise we’ll treat you better than Montgomery Ward.
Comment by falcon7204 — May 11, 2011 @ 8:22 a.m.
Pretty obvious the Illinois legislature has not driven around the Detroit area to see the fruit of the Socialist policies there. But the obvious seems to escape the educated enlightened ones……guess that’s why even the Kalifonication legislative members are in Texas to see the obvious…… no state tax, business friendly environment, right to work state. etc…..amazing how all these educated folks cannot fathom the high deficit….
Comment by Slave2none — May 11, 2011 @ 8:30 a.m.
Texas is open for business. We have many different tax benefits to businesses, and manufacturers in particular. We had a budget shortfall too, but we will not raise taxes on businesses or people. We are cutting our budgets across the board. Teachers, police, bureaucrats, etc.
What I fear is that Texas will be forced, again, to bail out other states like Illinois, California, Michigan, etc. The federal experiment fails if all of the good actions taken by one state are eliminated by the federal goverment by redistributing their federal tax dollars (or sharing in the national borrowing) to other states.
Comment by DW — May 11, 2011 @ 8:41 a.m.
I live just outside of Chicago. Illinois voters and our elected officials are pathetic. We never learn. Governor Quinnocchio is the worst of 50.
Comment by Kevin G — May 11, 2011 @ 8:59 a.m.
Don’t listen to DW, Sears!! We have enough Blue staters that have moved down here to Texas for the tax environment and then try to turn us into a nanny state like they left. DFW, Houston, Austin, & San Antonio have all become ‘Blue’ enclaves of apartment dwelling, non-tax paying, gov’t assisted parasites….
Go to Florida and join the rest in ‘God’s Waiting Room’ but ‘Don’t Mess with Texas!’
Comment by Pecozbill — May 11, 2011 @ 9:12 a.m.
What will never be measured by tax rates is the cost to do business in Illinois because organized labor is so powerful. It is no accident that many trade shows that previously were hosted every single year in Chicago are now hosted interchangeably between Orlando and Las Vegas. Some in Chicago argue that it is the lack of gambling in Chicago. This ignores the actual costs.
Work rules negotiated by organized labor in Chicago make it incredibly expensive just to set up a booth.
Democrats in Illinois are still in power and they will remain in power for as long as organized labor owns them. The only thing that will change the Democrats is their voters waking up poor, jobless, and stupid for having blindly endorsed the path to doom.
Fear not though. The offspring of the blind Democrat voters aren’t sticking around for doom. They are moving south and west in search of employment. They’re finding it too.
Comment by wtfci — May 11, 2011 @ 10:18 a.m.
This is enough to make me scream…
Dems regularly and endlessly use the boogeyman of “Big Business” as an example of entities not “paying their fair share” – Illinois Dems lead the pack (obama, durbin, quinn, and past kook blago).
They are then the first in line to come up with “special deals” when big business threatens to leave.
They then complain that the tax laws are full of loopholes.
Who created the loopholes? The dems.
Kind of like when I sit on my favorite chair and crush my favorite hat by mistake and wonder aloud “Now who the hell left THAT there??”
That would be me. I however don’t lie to myself that some mysterious someone else did it – but they certainly do.
Why don’t they just admit that the budget needs to be trimmed – particularly their pensions, health care and salaries?
Comment by Mike P — May 11, 2011 @ 2:36 p.m.
The only thing that will change the Democrats is their voters waking up poor, jobless, and stupid for having blindly endorsed the path to doom.
Comment by Louisiana jones act lawyer — August 18, 2011 @ 10:27 p.m.
One of the best ways to assure businesses that your state is “business-friendly” is to establish low, stable tax rates that don’t punish hard work or pick winners and losers.
Comment by louisiana maritime attorney — September 9, 2011 @ 7:38 p.m.