Amazon Is Big Winner in Illinois Tax Credit Race

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By Michael J. Bologna

Amazon.com Inc. scored one third of all job creation tax benefits offered by Illinois in the last two years and much more valuable benefits than previously disclosed, an analysis of business incentives data reveals.

The new analysis shows the e-commerce giant captured $112.2 million in tax subsidies over two years as part of a commitment to develop warehouses and distribution centers in the towns of Joliet, Monee and Aurora. The state’s previous disclosures have been incomplete, but an estimate by Good Jobs First, an economic policy research and advocacy group that has been critical of subsidies going to Amazon, approximated tax benefits of $43 million for the three facilities (see related story, this issue).

Amazon was clearly the king of tax credits in Illinois over the last two years, the data shows. The state provided $327.4 million in tax credits for 90 separate private job-creation projects, but Amazon’s award totaled 34 percent of the entire package.

Thomas Cafcas, a research analyst at Good Jobs First, said the true value of the Amazon credits has been hidden from public view for months, forcing news organizations and think tanks to develop estimates from limited data provided by the state. Cafcas said he was particularly disappointed that Illinois waited eight months to disclose the full value of credits reserved for Amazon’s mammoth warehouse and fulfillment center in Joliet.

“In the past in Illinois and in other states, this information was more immediately available,” Cafcas told Bloomberg BNA in a March 17 email. “The failure to inform the public that the state awarded some $71 million in subsidies (in Joliet) is an outrageous example of transparency slipping backwards in Illinois.”

Amazon declined to discuss its tax subsidy program.

EDGE Tax Credits

At the direction of Gov. Bruce Rauner (R), the Illinois Department of Commerce and Economic Opportunity (DCEO) March 16 unveiled a new online tool summarizing the key features of tax credit deals struck with expanding corporate taxpayers under the Economic Development for a Growing Economy (EDGE) tax credit program. The new database describes agreements reached between Jan. 20, 2015 and Dec. 31, 2016.

The report shows that on July 22, 2016, the state awarded EDGE credits totaling $71.5 million to Amazon in return for a commitment to create 3,500 jobs in Joliet. The credit is equal to 100 percent of the incremental income tax attributable to the jobs being created, but the annual credit can’t exceed the company’s state income tax for a particular taxable year.

Two similar deals were signed on Dec. 15, 2016. Amazon captured $27.8 million in EDGE credits aimed at its creation of 2,500 jobs in Monee and $12.9 million in EDGE credits for the creation of 1,200 jobs in Aurora.

The full DCEO report shows Amazon’s credit program far outpaced other taxpayers’ programs during the first two years of the Rauner administration. The second place trophy went to Rivian Automotive LLC, which pledged to create 1000 jobs in Normal, Ill. in return for $49.2 million in EDGE credits. Other major companies receiving credits include United Parcel Service, Inc. and Conagra Foods, Inc. Most taxpayers won awards of less than $1 million.

Greater Disclosure?

DCEO director Sean McCarthy touted the new web-based tool as an exercise in greater disclosure.

“I am proud to have taken this important step in providing the people of Illinois greater insight into these agreements which will create billions of dollars in new capital investment and thousands of new jobs in our state,” McCarthy said in a statement.

But Cafcas pointed to significant flaws in DCEO’s new website. While the site provides access to the actual agreements signed by taxpayers, many critical terms have been redacted. For instance, information about wage and benefit terms for new hires and the key economic benefits were all redacted from the Amazon agreements.

DCEO officials attributed the redaction to “trade secrets” protected for taxpayers. But Cafcas expressed doubts about such explanations.

“It is deeply concerning that Illinois has slipped backwards into darkness, treating information that is required by statute for disclosure as confidential—specifically redacting information related to wages and benefits,” he said. “Adding insult to injury, it seems to say very little about accountability and compliance related to subsidy contracts.”

‘Arms Race.’

Ralph Martire, executive director of the Center for Tax and Budget Accountability, declined to pass judgment on the Amazon data, but questioned the broader value of the EDGE program as an economic development tool.

“There is really no credible data which indicates this is an effective method of developing your economy,” Martire told Bloomberg BNA. “Most of these credit expenditure programs are not grounded in evidence. These are really political tools that governors feel they need to have because other governors have them—arms race stuff.”

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

The online tool for EDGE credits is at http://src.bna.com/m6b.

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