Lawmakers are closer to figuring out a way to pay for a tax incentive package aimed at keeping major companies in Illinois.
It’s estimated $570 million could be found by decoupling from federal bonus depreciation laws. Companies, under federal law, can write off all at once the amount their new machinery, put in service between October 2010 and this December, will depreciate over time.
For example, a company that purchases a $1 million asset and puts it into service between October 2010 and December 2011 can assume it will depreciate by $100,000 a year for 10 years. The federal law allows companies to write off the entire depreciation value all at once, instead of writing off $100,000 a year for the next 10 years.
Decoupling from the federal law means the state essentially plays by its own rules, and would remove the ability of Illinois companies to take advantage of the federal incentive.
Mark Denzler, vice president of the Illinois Manufacturers Association, is for it. “A company can still depreciate that $1 million asset, they’re just going to over that 10 year period of time instead of the one year period of time,” he explains.
Much of that money would go toward EDGE tax credits for Sears and tax breaks for the CME Group. Money would also go toward extending the Earned Income Tax Credit for low-income families and the statewide Research and Development (R&D) tax credit.
The framework is acceptable to some lawmakers, but they want to see more help for small business as well.