Tuesday, August 10, 2004
Illinois is expanding its tax credit program to include smaller firms. The idea is to encourage "traded" businesses to expand in the state. (Traded firms are businesses that derive a majority of their revenue from outside the state.)
This legislation highlights one of the major problems with tax incentives: they tend to expand over time. In addition, tax incentives add complexity to the administration of the tax law. This Illinois statute provides an excellent example.
To qualify for the credit, an Illinois business must prove that the expansion in Illinois would not have occurred without the credit. To do that, applicants are required to submit projected costs for the expansion in Illinois and a competing state. The analysis must include the costs of labor, utilities, taxes and the cost differential of another state's incentive programs.
posted by Ed Morrison |
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Illinois expands tax incentive program
