Business
2:37 pm
Fri December 2, 2011

Sears Considers Leaving Illinois For Better Tax Deal

Originally published on Fri December 2, 2011 4:00 pm

Thousands of jobs are on the line in a competition between states over the corporate headquarters of Sears. Several states are offering tax incentive packages to try to lure the company away from Illinois, including one bid from Ohio that's worth up to $400 million.

The Sears Holding Corp., parent company to Sears and Kmart, says it is seriously considering the offer after Illinois lawmakers failed this week to approve a package of tax incentives aimed at keeping Sears and another corporate giant from leaving.

The failed legislation would have also included tax breaks and credits for the parent company of the Chicago Mercantile Exchange, which is threatening to leave.

Illinois Gov. Pat Quinn says he is willing to make changes and hopes lawmakers will take the tax credit package up again before Christmas.

"I think that the proposed help for Sears is more than adequate to keep them here, and I hope we can put the movement together this month to get that job done," he says.

Quinn and his fellow Democrats who control Illinois' Legislature have been taking heat from the business leaders for raising the state's income tax rates last January to help close a gaping budget deficit.

Other States Make Their Offers

The tax hike led other states, including Indiana, Wisconsin and New Jersey, to launch ad campaigns in Illinois to try to lure businesses away.

The latest is Ohio, which Illinois officials say is offering $400 million in tax incentives to Sears. Republican Gov. John Kasich would not confirm the amount, but he told reporters last month that Ohio is upping its game in pursuit of Sears and other corporate giants.

"We're in there pushing and offering," Kasich said. "It's really good to have a CEO talk about the fact that we have been very, very effective in our offers; that's why we got their attention."

States are increasingly looking to take businesses away from one another as new job creation remains slow.

"We've received proposals from roughly one-third of the states in the union," says Sears spokesman Chris Braithwaite.

He says there's a lot more at stake than just the 6,000-plus employees working in Sears' corporate headquarters — more than 9,000 local vendors, contractors and businesses that provide goods and services to Sears.

"You're talking about 30,000 hotel nights and meals, 18,000 airline tickets in and out of O'Hare for associates alone, 100,000 people visiting our campus every year," Braithwaite says. "This is a company that definitely is providing value to the state, and obviously, as we've seen from the interest from other states, they see that too."

Backlash Against Corporate Incentives

But states are beginning to demand that companies that get tax breaks to stay or relocate live up to their hiring and employment promises — or even promise no layoffs — as part of the deal.

And the backlash against bank bailouts and corporate giveaways that is fueling the Occupy Wall Street movement is making some lawmakers, at least in Illinois, a little wary of incentive packages.

"We need to make clear that Illinois will not be held hostage by corporations threatening to exit," said Democratic Illinois State Rep. Jack Franks before casting his vote against the Sears deal.

Quinn says he won't get into a bidding war for Sears, and he insisted on some tax relief for small businesses and Illinois' working poor as part of the assistance package.

Sears says it needs that package to pass before the end of the year if the company is going to stay in the state it has called home for more than a century.

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Transcript

GUY RAZ, HOST:

Thousands of jobs are on the line in a competition between states. They're vying to be the new home of Sears corporate headquarters. Several states, including Ohio, are offering tax-incentive packages hoping to lure the company away from Illinois. One bid is worth up to $400 million. As NPR's Davis Schaper reports now, Sears is considering the move after Illinois lawmakers failed to approve their own package of tax incentives.

GOVERNOR PAT QUINN: OK. Ready? Ten, nine, eight, seven, six, five, four, three, two, one.

DAVID SCHAPER, BYLINE: With the help of several schoolchildren, Illinois Governor Pat Quinn yesterday counted down the lighting of the Christmas tree in the atrium of the state's main office building downtown Chicago.

QUINN: OK. Boom. There you go.

(SOUNDBITE OF APPLAUSE)

SCHAPER: Underneath the enormous fake tree were big fake presents with brightly colored bows. What's not under the tree is the big gift the Sears Holdings Corporation has on its wish list. It's a package of tax credits and incentives that would keep the parent company of Sears and Kmart stores in the Chicago suburb of Hoffman Estates. This week, the Illinois House failed to approve legislation that would not only help Sears but also included tax breaks and credits for the parent company of the Chicago Mercantile Exchange, which is also threatening to leave. Governor Quinn says he's willing to make changes and hopes lawmakers will take it up again before Christmas.

QUINN: I think that the proposed help for Sears is more than adequate to keep them here, and I hope we can put the movement together this month to get that job done.

SCHAPER: Quinn and his fellow Democrats who control Illinois' legislature have been taking heat from business leaders for raising the state's income tax rates last January to help close a gaping budget deficit. The tax hike led other states, including Indiana, Wisconsin and New Jersey, to launch ad campaigns in Illinois to try to lure businesses away. The latest is Ohio, which Illinois officials say is offering $400 million in incentives to Sears.

GOVERNOR JOHN KASICH: You know, we're in there pushing and offering.

SCHAPER: Ohio Republican Governor John Kasich would not confirm the amount, but he told reporters last month Ohio is upping its game in pursuit of Sears and other corporate giants.

KASICH: It's really good to have a CEO talk about the fact that we have been very, very effective in our offers. That's why we got their attention.

SCHAPER: States are increasingly looking to take businesses away from one another as new job creation remains slow.

CHRIS BRATHWAITE: We've received proposals from roughly one third of the states in the union.

SCHAPER: That's Sears spokesman Chris Brathwaite, who says there's a lot more at stake than just the 6,000-plus employees working in Sears corporate headquarters but also the more than 9,000 local vendors, contractors and businesses that provide goods and services to Sears.

BRATHWAITE: You're talking about 30,000 hotel nights and meals, 18,000 airline tickets in and out of O'Hare for associates alone, 100,000 people visiting our campus every year, this is a company that definitely is providing value to the state, and obviously, as we've seen from the interest from other states, they see that, too.

SCHAPER: But states are beginning to demand that the companies that get the tax breaks to stay or relocate, live up to their hiring and employment promises as part of the deal or even promise no layoffs. And the backlash against bank bailouts and corporate giveaways that is fueling the Occupy Wall Street movement is making some lawmakers, at least in Illinois, a little wary of incentive packages. Here's Illinois Democrat Jack Franks before casting his vote against the Sears deal.

STATE REPRESENTATIVE JACK FRANKS: We need to make clear that Illinois will not be held hostage by corporations threatening to exit because these actions come at the expense of small- and medium-sized businesses that are not getting similar bailouts.

SCHAPER: Governor Quinn says he won't get into a bidding war for Sears, and he insisted on some tax relief for small businesses and Illinois' working poor as part of the assistance package. Sears says it needs that package to pass before the end of year if the company is going to stay in the state it has called home for over a century. David Schaper, NPR News, Chicago. Transcript provided by NPR, Copyright NPR.