As proof of the misguided, counterproductive policies of Illinois, Governor Quinn hiked corporate incomes taxes to bail out a state deep in fiscal trouble, (it did not and will not work), now grants corporations hefty incentives to not move to Texas.
The Chicago Tribune reports $100 million keeps Motorola Mobility in Illinois
Gov. Pat Quinn put up more than $100 million in financial incentives to persuade smartphone company Motorola Mobility to keep its corporate headquarters in Libertyville — the largest package he has offered a company to date and a signal of how badly the state wants to hold on to high-tech jobs.
To persuade the maker of mobile devices and cable TV set-top boxes to stay, rather than move to California or Texas, state lawmakers sweetened terms of its tax-credit incentive program as it has for automakers, including Mitsubishi, and truck- and engine-manufacturers, including Navistar International Corp.
Navistar landed a $64.7 million package last year to keep its headquarters in Illinois, the second-largest deal during Quinn’s tenure.
The deal, announced Friday, breaks down to about $34,750 for each of the 3,000 jobs Motorola Mobility has agreed to retain, considerably more than the $15,000 to $20,000 per job that is more typical when the state awards tax credits to keep or attract businesses.
“We don’t want folks to leave,” Quinn said. “We want them to stay and grow with great companies like Motorola.”
Inane Actions Hurt Small Businesses Most
Note the silliness of Governor Quinn’s explanation. “We don’t want businesses to leave”.
If Quinn did not want corporations to leave, then why did he hike the corporate tax rate to an effective 9.5% thereby giving businesses a huge incentive to leave?
I discussed the tax situation of Illinois at length recently in Governor Quinn Holds Illinois Cities Hostage Over Budget Proposal; Cities Face Massive Cash Crunch. Please give it a look if you missed it. I cover gas taxes, sales taxes, corporate taxes, prevailing wages, right-to-work, home rule taxes, and blatant lies by Quinn.
Quinn gave Navistar and Motorola a combined $167 million to stay in Illinois just to keep 3000+ jobs here. Who is hurt by these actions?
The answer is everyone except the public unions screaming for higher taxes.
Unfortunately, small businesses will bear the brunt of Quinn’s nonsense. Small businesses get no tax breaks, yet it is small businesses that create most new jobs, not giants like Motorola.
About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.