Good Money After Bad: "Transferability" Would Make EDGE Tax Credits Even More Dubious Economic Policy
May 15, 2017
The Economic Development for a Growing Economy ("EDGE") Tax Credit program has released more than $1.6 billion in credits to companies promising to create or retain jobs in Illinois since its creation in 1999. But the evidence that tax incentive programs like EDGE produce real economic growth is limited, and EDGE credits in particular have been abused by companies simply moving jobs from one part of the state to another, as found by a 2015 Chicago Tribune investigation.
Now, a bill would reform and extend EDGE (under the name "THRIVE") with a twist that will only make the benefits of the program even more dubious: "transferability." Currently, companies cannot receive more in EDGE credits than their total state tax liability. But a "transferable" credit would allow companies to sell their excess credit to another company with a large enough tax liability to use it. That means that the state would end up directing resources to companies that had not even stated an intent to create or preserve jobs, reducing funds available for core services like education, health care, human services, and public safety.