Here’s an issue on which rich Republican Gov. Bruce Rauner and J.B. Pritzker —by far the wealthiest of the Democrats aiming to unseat Rauner next year — find common ground.
Both Rauner and Pritzker are fans of a state tax-credit program for rich investors in startup companies in Illinois.
In fact, Pritzker is more than just a supporter of the program — the venture capitalist has profited handsomely from it.
Pritzker’s companies have gotten tax credits worth more than $1.9 million over four years through the Illinois Angel Investment Tax Credit program, records show.
As he did when his big property-tax breaks were revealed earlier this year, Pritzker says he’s merely availed himself of what the law offers him.
“It diminished a little bit of a very high risk,” Pritzker says of the tax credits his companies got. “This is one way I believe we, as Democrats, should stand up for job creation.”
The program began in 2011 and lapsed at the end of last year. But last month Rauner signed a bill to restart the initiative in 2018.
Pritzker and others who invested in small companies in Illinois got a tax credit for 25 percent of the amount they risked.
Pritzker says it’s a fair deal for the rest of the state’s taxpayers — especially given that an estimated 85 percent of the startup companies supported by the program’s participants will fail.
Two of the companies Pritzker says he invested in through the tax-credit program — Signal marketing company and SpotHero, a parking-reservation service — are now thriving, with hundreds of employees in Chicago.
Of Signal, Pritzker says, “I took the chance of investing in them when nobody else had.”
And, at the time he invested in SpotHero, he says, “They had nothing — no product, no revenue.”
He wouldn’t go so far as to say he wouldn’t have invested in those companies if not for the state tax credits, saying only that the program factored into his decisions.
“I think it’s good public policy to have those incentives there,” Pritzker says.
What made perfect sense for a venture capitalist, though, might not look as flattering for a rookie Democratic candidate, especially a billionaire who’s vying to lead the same cash-strapped state government he’s gotten those tax breaks from. Much less one who so far has invested $21 million out of his own pocket to seek the nomination of a party that’s shifted to the left.
By taking advantage of the tax breaks, Pritzker might have undermined whatever ability he has to position himself as the candidate most unlike Rauner. In this environment, some progressive Democrats are spurning what they consider corporatist, neo-liberal candidates.
In May, Sun-Times reporter Tim Novak reported that Pritzker had saved nearly $230,000 on his property taxes by arguing that a Gold Coast mansion he bought for $3.7 million, began to renovate and then halted the work was “uninhabitable.”
Under the state angel investor program, four Pritzker businesses got a total of more than $1.2 million in tax credits in 2012. He got more state tax credits in 2013, 2014 and 2015, when two of his companies claimed a total of more than $537,000 in credits.
One Pritzker company that got a $250,000 tax credit later contributed $82,000 to the Illinois Democratic Party; the party’s chairman, state House Speaker Michael Madigan of Chicago; and three Democratic candidates for the Illinois House.
Pritzker had every right to claim the tax credits and to pump money from one of those companies into his political efforts.
His angel investor’s halo might have more luster, though, if he hadn’t used money from us — the rest of the taxpayers of Illinois — to help polish it.