Business tax incentives need a regional approach

The Daily Herald Editorial Board
Posted8/30/2017 6:11 PM
  • East Dundee sued after a Walmart, lured by tax incentives, moved to Carpentersville.

      East Dundee sued after a Walmart, lured by tax incentives, moved to Carpentersville. Brian Hill | Staff Photographer

Concern about jobs leaving town often focuses on international borders, as when manufacturers move to Mexico. Or on states, with the tug of war to keep businesses on our side of the Wisconsin or Indiana lines.

But the competition locally is just as stiff, with neighboring suburbs going toe-to-toe to lure businesses or keep them. Many businesses count on it, having learned to play hardball with competing bids from different towns to secure property tax or sales tax breaks, tax credits, exemptions and other financial inducements to do business there.

Jobs and economic development rightly are top-of-mind for town administrators and elected officials, but more cooperative approaches are worth exploring for ways to protect jobs and give the best deal not only to local companies, but to local residents.

Consider these scenarios:

• Downers Grove rebated $1.1 million in sales taxes last year to eight large businesses under agreements meant to keep them in town. But sales tax revenue then was down $1.3 million, so council members enacted a new 1 percent tax on food and beverages, costing consumers and leading restaurants to complain about fairness, Daily Herald writer <URL destination="">Jake Griffin notes.

</URL>• Upset that Walmart moved to Carpentersville after negotiating for $4.3 million in tax increment financing funds, East Dundee filed a series of lawsuits seeking, among other things, $450,000 in lost sales tax revenue. A Kane County judge this month threw out the latest complaint. East Dundee hasn't disclosed its legal costs, but Carpentersville has spent $170,000.

• Northwest Suburban High School District 214 sued Mount Prospect in June over a new TIF district, which commits extra tax dollars to economic development meant to lure businesses but diverts money away from schools and governments.

Nationally, tax incentives now offset about 30 percent of what the companies otherwise would have paid, compared with 9 percent in 1990, according to an analysis cited in The Wall Street Journal.

Some in the suburbs espouse a broader approach to attracting and retaining businesses and industry, which we support.

Lake County Partners, the Chicago Metropolitan Agency for Planning and similar organizations push for a collaborative approach and propose taxing structures that can tamp down the need for intense local competition for businesses. The region could end up winning, fewer towns would end up losing and more consistent policies could moderate the tax increases that plague Chicago-area residents.

"If we're going to talk about ending the flight of businesses out of Illinois, we can't move a business from Deerfield to Chicago and call it a success, or vice versa," says Lake County Board Chairman Aaron Lawlor, a proponent of the collaborative approach. "That's not a net economic growth for the region."

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