Let’s start with a simple number: $89 billion.
That’s the number of total revenues Archer Daniels Midland made worldwide last year.
Then, add another: $24 million. That’s how much the agricultural giant is asking the Illinois State Legislature for in tax breaks to keep its headquarters in Illinois.
But there’s one more: 100. That’s the number of jobs the company plans to include as part of a decision to relocate it’s headquarters outside of Decatur, Ill., its long-time home.
ADM made news recently with its decision to relocate, saying it needs a more global city to make international travel and employee recruitment easier. Without saying so publicly, Chicago is believed to be the company’s preferred location.
Yet, suggesting that the company could decide to move to another state, ADM wants $1.2 million a year for the next 15 to 20 years in tax incentives to stay. It also wants to be able to continue retaining employee’s personal income tax withholdings instead of turning them over to the state as an added tax benefit. The company has said that since there are already years in which ADM’s corporate income tax liability to the state is minimal, it wouldn't benefit from a regular tax credit.
There’s little doubt that states like Illinois, Indiana and other have to remain hyper-vigilant in their quest to retain jobs, economic growth and companies with marquee names like ADM. And, historically, tax incentives have been a powerful and often successful way of keeping home-state companies from skipping town.
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But, despite their popularity, there’s also ample evidence state-level tax incentives as a whole do little or nothing to retain or grow jobs down the road. A study in 2010 by the Center for Budget and Policy Priorities found that corporate income tax cuts are unlikely to have a positive impact on a state’s rate of economic growth or the pace at which it generates private-sector jobs.
An analysis earlier this year of New Jersey’s decision to award $1.95 billion to companies since 2011 shows the incentives still resulted in the state’s unemployment rate lagging the national average. And just last month, computer chip giant Intel announced it was eliminating 400 jobs at a New Mexico plant, just six months after receiving state tax breaks.
At a time when Illinois’ budget deficit tops $6 billion and the state owes more than $7 billion to vendors, social service providers, hospitals and others, it seems a bit of a hard sell to suggest that a global company with $89 billion in revenue needs a handout in order to move 100 people from one end of the state to the other.
That means, despite the pressure to keep the global company and its prestige right here in Illinois, Gov. Quinn, the Illinois Legislature, Mayor Emanuel and anybody else tempted to roll out the red carpet for ADM to the tune of $24 million should think twice. And then say no.
Especially when that move is intended to allow an already successful company little more than the chance to do business easier and make even more money.
