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Illinois’ data center tax incentives called ‘corporate welfare’

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Wednesday, October 9, 2019  |  Article  |  By Greg Bishop | The Center Square

Taxes, misc. (89) Demmer, Tom--State House, 90 , Sims Jr., Elgie--State House, 34
A data center tax credit touted by a bipartisan group of state lawmakers and Illinois Gov. J.B. Pritzker is being called corporate welfare by a group that supports free enterprise.

Pritzker joined a group of bipartisan state lawmakers this week at a data center in Chicago. He talked about how Illinois has great resources, a strong workforce and is the hub of infrastructure, including large communications networks.

“But what our state hasn’t done until now is a vision on how to stay a leader in the future,” Pritzker said.

Among the lawmakers was state Sen. Elgie Sims, D-Chicago, who echoed Pritzker. Sims said that other states have offered data center construction tax incentives.

“Iowa had put in an incentive where we already lost one data center. We were in jeopardy of being out of the running for others,” Sims said. “We had to do something.”

The incentives give tax breaks for data center companies that hire from certain areas with poor economies. It also requires project labor agreements in order for incentives to be given. Sims said that will sustain “labor peace.”

The incentives also require an investment of at least $250 million in a project. Competitive Enterprise Institute Senior Fellow Ryan Young said it’s corporate welfare.

“Only the Googles, Amazons, Apples, and Oracles of the world can afford to build these centers to get the tax break and none of these companies need the help. They’re already profitable,” Young said. “This tax break is corporate welfare, plain and simple. “

Republican state Rep. Tom Demmer said the tax incentives will attract such operations to Illinois.

“What can we do to send a message to both business and to local government that we’re giving you the tools, that we’re giving you resources, and that we want you to promote and expand development of future-friendly jobs all across the state,” Demmer said of the incentives.

Young said giving one industry incentives over another was bad policy.

“The state’s taxpayers would be much better served if Springfield instead concentrated its efforts on reducing spending and deficits, not extending favors to already profitable businesses,” Young said.

The tax incentives were agreed on as part of the state budget lawmakers passed and the governor enacted this summer.