Illinois and Chicago’s pattern of cronyism and corporate handouts

Instead of creating a business-friendly environment by keeping taxes and regulations low, Illinois state government and the city of Chicago have a laundry list of special tools they claim promote economic development. These tools include: tax increment financing, or TIF, districts; economic grants; and a series of loopholes in the tax code. When government gives...

Instead of creating a business-friendly environment by keeping taxes and regulations low, Illinois state government and the city of Chicago have a laundry list of special tools they claim promote economic development.

These tools include: tax increment financing, or TIF, districts; economic grants; and a series of loopholes in the tax code.

When government gives millions of taxpayer dollars to MillerCoors and Boeing Co. for relocation, and thousands of taxpayer dollars to AT&T Inc. and Navistar International Corp. to train employees, the logic offered up is that this transfer of resources promotes a skilled labor force and greater business activity.

But the story that’s often not told is that to fund this corporate favoritism, government must take money from families, corporations, small businesses and struggling entrepreneurs. That weighs down investment and growth, resulting in fewer startups, lost economic output and reduced job creation.

One of the most common examples of this type of cronyism is TIFs. More than 1,200 municipalities in Illinois have TIF districts, which create special economic zones that siphon local property tax dollars to developers. In the Chicago metropolitan area alone, $16.4 billion worth of property falls under the guise of TIF districting, relaying tax burdens to everyone else.

TIF district cronyism  

• MillerCoors received $21.5 million in TIF funds for relocation costs in 2010, the same year the company’s net income was $1.09 billion.

• Quaker Oats Co. has received $13.1 million in TIF funds since 2000.

• Granite City gave Trivers Associates Inc. $2.4 million in TIF funds to construct a downtown 3D cinema.

• In 2010, $7.2 million was given to THF Properties to build a Walmart Supercenter in Granite City, even while Walmart Inc.’s profit exceeded $14 billion.

TIFs are only one of many tools used by Illinois government to pick winners and losers.

Other economic development cronyism 

• Illinois government uses taxpayer dollars to provide hundreds of millions of grants to the coal industry in Illinois.

• Boeing received $3.25 million in grants to move its headquarters to Chicago, and an additional $2.24 million reimbursed for relocation costs.

• Rolling Frito-Lay received $249,000 in grants for training their workers.

• AT&T Inc. received $200,000 in grants for training their workers.

• Major companies are given $113.5 million in tax relief annually.

• $77 million to Chicago Mercantile Exchange Group, Chicago Board of Trade
• $15 million to Sears
• $10 million to Motorola
• $8 million to Chicago Board Options Exchange