Illinois Yanking String of Manufacturers Doing R&D

Illinois’ state symbol for manufacturing research could be a yo-yo.

Businesses in Illinois beg for stability and predictability in matters of government regulation and taxation, but the state’s tax credit for manufacturing research and development has spooled up and down for 13 years. And it is stuck in the wrong place again, like a yo-yo with a knot, due to the absurd inability of the Illinois General Assembly and governor to draw up a basic state budget.

Illinois ended a permanent 6.5 percent tax credit for manufacturing research and development in 2003. Since then, temporary credits have been allowed to expire four times. In each case — until now — the credit has been restored, but not before manufacturers threatened to move high-quality R&D jobs to more hospitable environments.

Most recently, the state R&D credit expired last July and has not been renewed. Tax credits usually are renewed as part of the overall budgeting process, and that — as everybody knows — has been going nowhere.

In 2014, Illinois manufacturers produced $101 billion in economic output and exported $64 billion worth of goods, according to the Illinois Manufacturers Association. Illinois has 450 corporate R&D headquarters. The average R&D job pays more than $80,000 a year, and managers make more than $100,000. Those are jobs lawmakers should keep in the state. If you’re looking for ways to make Illinois more pro-business, here’s a good place to start.

State Rep. Michael J. Zalewski, D-Riverside, has introduced legislation that would modernize the state’s research and development credit and once again make it permanent, just as Congress recently did with a similar federal R&D tax credit. The Legislature ought to dig his bill out of committee and give it a hearing without waiting for all the other issues in Springfield to be resolved.