Archer Daniels Midland Co.’s tax credit request gets frosty reception
BY DAVID ROEDER Staff Reporter October 1, 2013 2:54PM
Rep. Barbara Flynn Currie
Updated: November 3, 2013 6:24AM
Members of an Illinois House committee Tuesday had a frosty reception for Archer Daniels Midland Co.’s request for a tax credit worth almost $20 million tied to the move of its corporate headquarters.
State Rep. Barbara Flynn Currie (D-Chicago) said ADM “essentially is blackmailing the state” and asking for special treatment.
“You’re asking us to change the tax policy to give a leg up to this particular corporation,” she said.
A Republican, state Rep. David McSweeney of Cary, said he would oppose further tax incentives for individual companies in favor of across-the-board cuts in corporate tax rates. He asked ADM representatives “to join me in reducing the tax rates so the government doesn’t support winners and losers” in private industry.
The credit would apply if the Decatur-based grain-processing giant stays in the state. The company hasn’t said where it prefers to go, but it is believed to favor Chicago.
ADM has said it will keep 4,400 people in Decatur, which will become its North American headquarters, but establish a global headquarters with 100 people elsewhere. It expects to hire another 100 people for a technology center at the global headquarters within a few years.
Where it will be is an open issue, although sources have said Chicago is the leading choice.
“We are getting a lot of interest from a lot of different locales,” Gregory Webb, vice president of state government relations for ADM, told the panel.
The House Revenue & Finance Committee took testimony on the ADM bill, sponsored by the panel’s chairman, state Rep. John Bradley (D-Marion), but did not vote. It also heard testimony on a similar tax break sought by Zurich Insurance Group, which is keeping its North American headquarters in Schaumburg but relocating it.
“This is a process. This is a tough committee,” Bradley said after the companies made their presentations.
The proposals involve expanded use of the state’s EDGE tax credit, which normally is applied to a company’s Illinois income taxes. ADM and Zurich want the credit to apply to the amount it withholds and must remit for employees’ state income taxes.
ADM executives said the credit would be worth about $1.2 million a year for a maximum of 15 years. They said that in many years, the company doesn’t have a high enough charge for state income taxes to earn the credit it seeks.
House Bill 380, the “ADM bill,” also includes a 10 percent reduction in the company’s utility taxes. But the company said it is refusing that provision.
After the hearing, Victoria Podesta, ADM’s chief communications officer, said the utility tax break was “not relevant” to the company’s operations.
Podesta said ADM paid an Illinois income tax of about $2 million last year.
At the hearing, McSweeney asked why ADM, which had 2012 revenue of $90.6 billion, needs a state tax break.
“That’s the reason we have been successful,” said Ray Young, ADM’s chief financial officer. “ADM has been minding its pennies and nickels and dimes over the years.” He added that the commodities business is highly competitive, with deals made around sub-penny pricing.
Zurich Insurance intends to move its 2,500 employees in Schaumburg to part of the Motorola Solutions Inc. campus in the same town. While it is not threatening to move out of state, it also wants EDGE tax credits to apply to its state withholding tax.
Executives said they are still calculating the value of the tax break.
Dennis Kerrigan Jr., Zurich’s chief legal officer, said the company cannot take full advantage of the credit if it’s deducted from its state income tax bill. He said the company’s largest payment to the state comes in premium taxes it owes as an insurance company.
Kerrigan said Zurich expects to add 250 positions in Schaumburg over the next five years.