Thursday, December 29, 2011

Crony capitalism: Sears gets $275 million Illinois tax break, none of its 79 store closings are in state

Hoffman Estates, home
of Sears
Sears, which has been based in Illinois since 1886, threatened to move its headquarters out of the Prairie State after Governor Pat Quinn and Democrats in the General Assembly nearly doubled the corporate income tax rate in January. Personal income taxes--mine included, of course--went up 67 percent.

Two weeks ago Quinn signed into law $150 million in tax breaks for Sears. The CME Group received a similar deal. Thousands of other Illinois businesses did not receive a crony capitalism kiss.

Sears had a bad holiday season--it's closing 120 stores and it revealed 79 of the doomed locations today. The Hoffman Estates-based retailer operates over 2,000 stores--I find it hard to believe that the combination of a worse-than-the-rest-of-the-nation Illinois economy and the many older stores in this Rust Belt state didn't "earn" a store among those 79. I've been inside some of those stores. Yuck! According to the Chicago Tribune, Sears is getting local tax breaks too--up to $125 million worth.

Some of those targeted stores are Kmarts.

Is Sears thinking along political lines in regards to Illinois stores? Closing locations is part of the retail business, but if Sears is considering political implications in regards to shuttering stores, it's understandable since it has done well playing that game. But perhaps it should zoom in on offering attractive products at low prices in a pleasant shopping atmosphere instead. Then it would be breaking ground on new outlets.

As for Illinois, it should lower taxes for everyone, cut spending, and institute dramatic pension reform for public-sector workers. Quinn is counting on a growing Illinois economy to cut the state deficit so he can let his "temporary" tax increases expire three years from now.

Keep dreaming...

Each of the states bordering Illinois are facing at least two Sears closings. Ohio and Michigan, both of which were trying to lure the Sears HQ to their respective states, will each see six store shutdowns.

Each Sears and Kmart employs 40 to 80 workers.

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