Americans always have a wide variety of sports to watch, especially this time of year. Basketball, hockey and football are all in full swing, reminding us that competition is one of the cornerstones of American life. It’s not just athletics or even our biennial fall political season that reinforces the point.
In America, our whole economy is based on businesses and consumers competing with each other, and, of course, state and local governments also compete for businesses, investments and residents. It’s part of what has made ours the most prosperous and innovative economy in the world.
Competition only works when it is fair. When the rules of the game are transparent and equitably enforced, competition yields excellence. When the rules themselves are subject to competition, it yields corruption, entitlement and fraud. If NFL referees were allowed to award first downs and penalty calls to the highest bidder, it would be seen as an abuse, rather than the proper exercise of their power.
Unfortunately, that is exactly how too many local governments “compete” for businesses across the country and in Illinois. Rather than creating broad-based policies to ensure safe streets, good schools and a healthy business environment, many city and county lawmakers spend their time and their constituents’ tax dollars wooing business owners with offers of special treatment, exemption from rules and unfair advantages. Rather than attracting entrepreneurs and cultivating jobs, they try to steal prospects from other cities or states.
This practice of “poaching” turns healthy competition on its ear. Economically, it empowers politicians, instead of consumers, to pick winners and losers in the marketplace. Politically, it incentivizes the government to cultivate inequality rather than a fair process. Thus, the benefits of cronyism go to the few, not the many.
Consider the 1989 poaching of Sears’ corporate headquarters from downtown Chicago to Hoffman Estates. The deal cost local and state taxpayers $536 million in corporate incentives. A 2020 survey of 30 years of subsequent economic data by the Center for Tax and Budget Accountability “found no evidence that the massive package of tax incentives made a long-term difference to the economic well-being of Hoffman Estates.”
The same results undoubtedly await any future subsidies Arlington Heights may give to the Chicago Bears as part of the team’s relocation from Soldier Field to the site of the old Arlington Park race track. As one 2015 economic study found, professional sports franchises have “about the same impact on a community as a midsize department store.”
But the temptation is not limited to name-brand businesses. In 2011, Schaumburg lured Energy Parts Solutions from Elk Grove with a 60% property tax cut. Just a few years ago, Palatine used special treatment to poach two car dealerships from Arlington Heights. Unfortunately, this happens with regularity across Illinois and the United States.
In every case, businesses profited not from serving customers who were spending their own money, but from politicians who had the power to spend other people’s money. These sweetheart deals are not offered to everyone — just the special few — regularly leaving native, locally owned companies high and dry. Different businesses shouldn’t be paying different tax rates — that is, paying higher taxes while subsidizing their competitors — based on the whims of politicians.
Without a level competitive playing field, the economy is skewed, away from fairness and empowering consumers and toward the corrupt collusion of crony capitalism.
It is long past time for Springfield to take municipal cronyism off the table, permanently. One of us, state Rep. Joe Sosnowski, R-Rockford, has introduced legislation in Springfield to that effect.
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The Local Government Business Anti-Poaching Act, HB0211, would prohibit local governments from offering special favors to Illinois businesses in exchange for relocating to their communities. It would end business incentives from politicians spending taxpayer dollars. It requires that businesses relocate based solely on their evaluation of a location and their ability to serve their customers with better prices, products and services rather than taxpayer funded special deals.
Under this legislation, Illinois lawmakers and businesses would both refocus their energies on the state’s economic, education, law enforcement and infrastructure policies to put the state’s economy to work for everyone, not just the privileged few.
Anti-poaching legislation will make Illinois’ economy as competitive as any state in the country, all year round.
Brian Costin is deputy state director of Americans for Prosperity-Illinois. State Rep. Joe Sosnowski represents Illinois’ 69th District.
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