55 Comments - Yellow Dog Democrat - Monday, Jun 13, 11 @ 11:42 am: It’ll be interesting to see how The Mayor closes the city budget gap while keeping his pledge not to raise property taxes and roll back the head tax. The problem with trying to cut taxes while cut expenses is that it creates a clear contrast for opponents to the cuts. “Mayor Emanuel wants to cut X while providing $19 million in tax breaks for Chicago’s biggest companies.” If you’ve got a good X, you’ve got a good argument. It also runs counter to the popular idea of “shared sacrifice” when some folks are getting tax cuts. Speaking of which, how about CPS giving the superintendent a raise while asking teachers to take a 4 percent pay cut? - Loop Lady - Monday, Jun 13, 11 @ 11:44 am: and I’m sure CME will get it…business is holding government hostage…I don’t think this is what the founding fathers had in mind when tey established the republic …BTW, I saw that Obama is placating Wall St. in order to get 2012 camapign cash…same thing, bigger scale… - Rich Miller - Monday, Jun 13, 11 @ 11:44 am: ===If you’ve got a good X, you’ve got a good argument.=== Maybe, but those sorts of arguments don’t seem to play out well in Chicago mayoral elections. - Loop Lady - Monday, Jun 13, 11 @ 11:45 am: and I’m sure CME will get it…business is holding government hostage…I don’t think this is what the founding fathers had in mind when they established the republic …BTW, I saw that Obama is placating Wall St. in order to get 2012 camapign cash…same thing, bigger scale… - Rich Miller - Monday, Jun 13, 11 @ 11:46 am: LL, no matter how you slice it, one business in a state as large as Illinois shouldn’t be paying 5 percent of all corporate taxes while about 80 percent of companies pay nothing. No matter what you think of CME, that ain’t fair. - 47th Ward - Monday, Jun 13, 11 @ 11:49 am: I think they’re setting the table to go forward with Reilly’s plan to charge nonprofits for things like water and permit fees. That could bring in enough to cover the end of the head tax, but they’ve still got to find 26 votes for it, and there are a lot of nonprofits that will squeal very loudly before the checkbooks open. Why is it that you never see nonprofits threaten to leave the city or the state, only businesses? - Loop Lady - Monday, Jun 13, 11 @ 11:50 am: I agree with you…let’s have all corporations pay taxes, as do most individuals…it should be the price of doing business in the state…you and I both know that legislation requiring all corps to pay taxes in IL will never be written, let alone pass… - Rich Miller - Monday, Jun 13, 11 @ 11:50 am: ===Why is it that you never see nonprofits threaten to leave the city or the state, only businesses? === Some of those nonprofits are pretty big businesses in their own right. - Rich Miller - Monday, Jun 13, 11 @ 11:55 am: Loop Lady, whether you live or work in the Loop, you must’ve at least noticed all those evil private employers. While I am 100 percent in favor of tax equity, mindless business bashing is not exactly a productive endeavor. - Anon - Monday, Jun 13, 11 @ 12:01 pm: I can understand CME’s frustration that they can’t use accounting tricks and what not to allocate their income to a lower tax state. If only we could restrict the practice in other industries. It isn’t like CME is saying they are being double taxed, its just under the rules, the majority of their income is taxable in Illinois. I would be interested in their solution, but a new formula sounds like a way for them to say only half or whatever amount of our income should be taxable. - Loop Lady - Monday, Jun 13, 11 @ 12:21 pm: I am not a business basher in the least…I am a let’s amend the tax code in order to make it equitable for all earners…have you noticed the middle class being shafted while corporate profits of late are in the black and then some…this is not captalism…it’s extortion by business interests…my husband ia a small businessman and would never be able skip paying taxes on his income…just sayin’… - crazy - Monday, Jun 13, 11 @ 12:22 pm: I understand why Mayor Emmanuel wants to eliminate the head tax- it is unfair for businesses to be penalized for hiring more workers. Bringing more jobs to Chicago does not deserve a tax. This is an example of government officials trying to make the state more business friendly… It will just be interesting how he will be able to find a solution to “make up” for the missing city revenue. - Anon - Monday, Jun 13, 11 @ 12:23 pm: “LL, no matter how you slice it, one business in a state as large as Illinois shouldn’t be paying 5 percent of all corporate taxes while about 80 percent of companies pay nothing.” I think in these cases you have to look at ‘overall tax burden’ The corporate tax slice is just one slice of the many faceted tax pie. - wordslinger - Monday, Jun 13, 11 @ 12:52 pm: Excellent story by Harris in the Trib. The CME and CBOE trial balloons make a lot more sense now. The CME will probably get some relief because they’re players and they’re not going anywhere. The shareholders are here, the traders are here, the support services are here and they just made a big investment out in Aurora that ties them here even more. –Early next year, trading firms from across the country will begin moving their computer systems into CME Group’s new 428,000 square-foot Aurora data center, designed to ensure the fastest trade execution possible. So while a trader might place an order from St. Louis, his or her computer systems will be in Aurora, which subjects the CME Group’s fee from the trade to Illinois taxes. –It’s a bit of an oversimplification, but the only fees not subject to Illinois taxes are the ones generated from face-to-face trades on the floor of the CME Group’s New York Mercantile Exchange. –CME Group won’t be able to move its entire business out of Illinois, at least anytime soon. But it’s currently weighing how far it thinks it can move Springfield.– - Are Ya Kiddin' Me? - Monday, Jun 13, 11 @ 12:56 pm: CME is gone. You don’t sell one of your two assets, when you don’t have to. CME does not “make” anything. They push paper. This is not like Ford mortgaging all hard assets several years ago to fund R & D and production. CME is unloading their only hard asset so that they can move. - Rich Miller - Monday, Jun 13, 11 @ 12:59 pm: ===CME is unloading their only hard asset so that they can move. === They’re keeping their trading floor, so I wouldn’t be so sure just yet. - wordslinger - Monday, Jun 13, 11 @ 1:19 pm: –CME is unloading their only hard asset so that they can move.– It’s a lease-back deal. They’re looking to raise cash for their shareholders, who are honked at the share price. They could move to anywhere on the planet, but if all their trades are running through their new Aurora center, they’re subject to Illinois tax. They want some relief and will get it. Shareholders are mad at management that they haven’t got it already, given the amount of money the pour into politics. You can get Tom Donovan would have had it lined up already, back in the day. - Anon - Monday, Jun 13, 11 @ 1:22 pm: Ya just keep pretending like they arent going anywhere. Keep pretending a corporate tax increase wont cost jobs. Keep pretending that people arent leaving this corrupt state…one day we will wake up and realize we’re in terrible shape. “”What? CME left? Didnt see THAT coming!” Yes you did - jerry 101 - Monday, Jun 13, 11 @ 1:24 pm: I would argue that CME is in defense mode, trying to ward off hostile takeover attempts. While they may be in the black, Rich pointed out the other day that they are not as profitable as some of their peers. Since they are publicly traded, this opens them up to a takeover attempt. So anything that boosts their bottom line, whether its doing a sale-leaseback of their building, or getting a tax break, will help them avoid that takeover. If there is a takeover of CME group, then we would see a big job loss. Any company looking to take them over is only looking to get their hands on all the trading work that CME processes. If a competitor takes them over, they’d be happy to move those operations right out of town and onto their own trading floor. I don’t feel bad for CME having to pay higher income taxes than other companies. I wonder why the other companies don’t pay more taxes. It’s unfair to CME. The other 80% should have a real tax bill to pay, which would go far in improving our budget picture. Of course, since we’re in a race to the bottom, that ain’t gonna happen. - soccermom - Monday, Jun 13, 11 @ 1:36 pm: Because all of those traders are just dying to move to Alabama. “Greeen Acres is the place to be, faaarm livin’ is the life for me…” And before you get started — I’m not bashing the rural life, coming from a farm family myself. It’s just that the traders I’ve known have not been the type of folks who dream of the quiet evening by the fireside with the cheery chirrup of crickets on the hearth… - fed up - Monday, Jun 13, 11 @ 1:39 pm: YDD, Its not a 4% pay cut that the teachers are being asked to take. It is forgoing a 4% pay increase. paychecks dont go down they stay the same . Doesnt sound nearly as dramatic as you want it to. - Johnston - Monday, Jun 13, 11 @ 2:17 pm: Soccermom is right. Time to call all these ’sky is falling’ chicken littles bluff. Illinois is one of the best states to do business in. Educated workforce, low taxes, responsible government (compared to Indiana, Wisconsin, Missouri, etc) low ratio of state employees to population CME should be begging to do business in Illinois. - Louis G. Atsaves - Monday, Jun 13, 11 @ 2:26 pm: I’ve actually stopped commenting on articles like these when it comes to the “business climate” in Illinois. Too many commentators think there is nothing wrong with the business climate in Illinois, which speaks volumes about our business climate or lack thereof. I guess when you push ill thought out tax increases during a lame duck midnight last night session, complaints rise. And for those businesses into long term planning, those newly redrawn legislative maps which will continue the “business climate” in Illinois for the next decade has to be a factor. So when Indiana, Wisconsin, Iowa and Missouri take pot shots against our business climate, we split hairs and try to show we are a nirvana or Garden of Eden for business in Illinois. Like trying to turn a lemon into a large grape. The article on the big campaign contributions is pretty amusing though! - Secret Square - Monday, Jun 13, 11 @ 2:37 pm: “all of those traders are just dying to move to Alabama” Probably not, but they don’t have to move THAT far away. I suspect they could find plenty to do in St. Louis or Milwaukee, or even Indy. - siriusly - Monday, Jun 13, 11 @ 2:42 pm: This may be a victory for Stand for Children in Chicago, but what about students in the rest of the state. Why can’t the suburban kids get a longer school day too? - soccermom - Monday, Jun 13, 11 @ 2:45 pm: Secret Square — I think if traders are looking for a great children’s museum or a wonderful zoo, they will enjoy Indy. But if they are looking for world-class dining and non-stop nightlife, they will have a hard time beating Chicago. (Unless they want to go to that low-tax mecca, New York City. Hey, maybe we could get the NYSE to come out here!) - soccermom - Monday, Jun 13, 11 @ 3:04 pm: There are 42 Fortune 500 companies headquartered in NYC. Guess those CEOs don’t know this: If your corporation does business, employs capital, owns or leases property for business purposes, or maintains an office in New York City, it is subject to the General Corporation Tax. This tax only applies to incorporated businesses (unincorporated businesses are subject to New York City’s Unincorporated Business Tax). If the corporation can demonstrate that a portion of its business was done outside New York City, that portion will not be subject to this tax. New York City’s General Corporation Tax is imposed at the highest of the following four rates: 8.85% of net income from New York City sources; .15% of total capital allocated to New York City; 8.85% of 30% of net income, plus the amount of salaries or other compensation paid to any person, including officers, who at any time during the year owned more than 5% of stock; or Minimum tax base of $300. S corporations are not recognized by New York City and are subject to full corporate income tax. - Rich Miller - Monday, Jun 13, 11 @ 3:08 pm: ===CME should be begging to do business in Illinois. === I’m hoping that was snark. - wordslinger - Monday, Jun 13, 11 @ 3:08 pm: –Too many commentators think there is nothing wrong with the business climate in Illinois, which speaks volumes about our business climate or lack thereof.– I don’t think anyone has ever said that. You can’t get rattled, though, every time someone puts out a press release. That’s not good business. And, as Rich pointed out, if 80% of corporations aren’t paying ANYTHING in state corporate income tax, it’s not like an increase in the rate is a game-breaker, except to the gullible. If the 45 other states in the union with smaller GSPs were business nirvanas, they wouldn’t be looking to poach. - soccermom - Monday, Jun 13, 11 @ 3:11 pm: Rich, I completely agree that it’s unfair for one company to bear 5 percent of the total tax burden. But that is an argument for closing the loopholes that the other companies are enjoying — not for cutting the rate on a company that’s paying an appropriate amount. - Rich Miller - Monday, Jun 13, 11 @ 3:16 pm: soccermom, I believe that the corporate tax hike was a mistake. It’s unfair to those of us who pay both and it’s unfair to the few big guys who shoulder too much of the burden already. It should be rolled back and a far more equitable solution needs to be found. - soccermom - Monday, Jun 13, 11 @ 3:28 pm: You’ll get no argument from me that our entire state taxation system needs a gigantic overhaul. But I still think corporations should pay their fair share, and that it is shameful to increase the taxes of people who are making very low wages without increasing the tax on corporations that are doing very well. (And dude — if you’re paying both, you need a better tax attorney.) - VanillaMan - Monday, Jun 13, 11 @ 3:36 pm: Commentors are comfortable with how stuff is done in Chicago. But Chicago is a closed city compared to its competition. You have to know people here to get a deal done. That is a major problem when other cities hungry for business welcome new start ups. CME has to compete. Other corporations have to compete. HQing in a closed city like Chicago will no longer be optimal. We might keep what we have for now. They know who to deal with. But as long as the current way of doing business in Chicago remains in place consider the City not an attractive place for future businesses compared to other major cities. Tear down the status quo Emanuel. Or be another mayoral pallbearer for the Loop. Your choice. - Rich Miller - Monday, Jun 13, 11 @ 3:41 pm: soccermom, all my business is done inside Illinois. - wordslinger - Monday, Jun 13, 11 @ 3:48 pm: If any of the names in play did bounce, my guess would be Sears. They have a new CEO who’s known for spinning off assets for cash; they’ve recently begun the heretofore unheard of practice for them of licensing their best brand names — Craftsman, Kenmore, DieHard — to other stores; and they’re sitting on a huge under-developed NW suburban campus that they could a bundle on. If I were the Cheeseheads, that would be the Illinois biggie I’d go after. Sears Holding, through their Land’s End division, already has very large campuses outside Madison and Milwaukee. An I-94 addition would make a lot of sense, if the price is right. - wordslinger - Monday, Jun 13, 11 @ 3:52 pm: VMan, I assure you that the grand poohbahs at CME and CBOE aren’t closed out of anything in the halls of power in Chicago. That’s why their members are so honked and that’s why they’re playing catchup now. - soccermom - Monday, Jun 13, 11 @ 4:07 pm: Rich — this is getting above my paygrade, but it you reincorporated as an S corp, wouldn’t you avoid the corporate rate? - Rich Miller - Monday, Jun 13, 11 @ 4:07 pm: Yes, it is above your pay grade. lol - Loop Lady - Monday, Jun 13, 11 @ 4:16 pm: let the CME move elsewhere…all trading will be done online in the future anyway…stop sticking up Chicago, it’s just a matter of time folks…Quinn, don’t take the bait! - 47th Ward - Monday, Jun 13, 11 @ 4:18 pm: Rich, your bar tab is a business expense and I think you can deduct like 20% off your adjusted gross income. Maybe if you ever opened your wallet at closing time, your liability would be less and you wouldn’t be threatening to bolt to Indianapolis or Des Moines or wherever it is that will offer you the best incentive package. Just a thought. (*ducks under desk*) - soccermom - Monday, Jun 13, 11 @ 4:20 pm: Here’s a QOTD — what tax incentives should Rich request to keep him from moving his business to Madison? - Just the Facts - Monday, Jun 13, 11 @ 4:24 pm: CME is a service business that is very profitable. Therefore, they pay a substantial amount of Illinois tax. Capitol Fax is a service business that is very profitable. Therefore, Capitol Fax and Rich Miller end up paying a substantial amount of income tax. Just the Facts has a lucrative employment niche. Therefore, Just the Facts ends up paying a substantial amount of income tax. To pay less state tax you have to relocate to a lower tax or no tax jurisdiction and not conduct business in Illinois - not realistic for CME, Capitol Fax or Just the Facts - or figure out how to convince the legislature to reduce the tax rate, or modify the tax code to provide “incentives” (loopholes) for your particular industry. The manufacturers have been good at lobbying for “incentives,” apparently the service industries not so much. As an alternative, the service industries need to lobby to eliminate the “incentives” (loopholes) enjoyed by others and then lower the overall rate. - Rich Miller - Monday, Jun 13, 11 @ 4:34 pm: ===Maybe if you ever opened your wallet at closing time=== Apparently, we haven’t had drinks together. - soccermom - Monday, Jun 13, 11 @ 4:40 pm: I have seen Rich pick up a check. A substantial check. - 47th Ward - Monday, Jun 13, 11 @ 4:49 pm: We have, just not lately. Soon I hope. Maybe poolside at Duffy’s in July? - Michelle Flaherty - Monday, Jun 13, 11 @ 4:57 pm: Wow Rich, you’ve transformed into Matt Murphy. Looking forward to your lt. gov bid. So you’d be OK with only hiking taxes on people, not businesses? And I believe what the CME is complaining about is the single sales factor approved in the later 90s. If I recall correctly the biz groups quietly backed Rod’s pension bond deal because they so feared he’d undo the single sales provision if it didn’t pass. Keep in mind, each “loophole” you close will result in its beneficiary crying foul and threatening to move elsewhere. - Rich Miller - Monday, Jun 13, 11 @ 4:58 pm: soccermom, I’m still swooning from that check. - Rich Miller - Monday, Jun 13, 11 @ 5:00 pm: ===So you’d be OK with only hiking taxes on people, not businesses?=== Rod? Is that you? - Yellow Dog Democrat - Monday, Jun 13, 11 @ 5:06 pm: @fed-up - “forgoing” a 4% pay increase that you were promised is a 4% pay cut for the next fiscal year, any way you slice it. Its not like they can ask BP to “forgo” increasing gasoline prices next year. Meanwhile, Brizzard walks in the door making $20,000 more than his predecessor. His justification? “Other superintendents make alot of money too.” To be fair, Brizzard’s pay will rank 41st in Illinois. On the other hand, Chicago teachers rank 71st in pay. I think it sets the wrong tone for the upcoming debate on cutting waste at CPS for Brizzard to get a raise before his first day on the job. My suggestion: set the compensation of Brizzard and all CPS administrators to teachers’ average salaries. Pay them bonuses based on student performance beneath them. If test scores, graduation rates, and college admission rates remain flat, Brizzard makes what Huberman made. If they go up, his pay goes up. Ditto all the way down the line. - VanillaMan - Monday, Jun 13, 11 @ 5:52 pm: See what you guys are doing? You are fighting over who is to blame that CME wants out of Illinois. That is ridiculous. It shouldn’t be up to CME to cut a deal. Nor should it be Sears and anyone else thinking about moving out. There should be no reason to cut deals. There should be no reason we have to cut a deal to keep someone here. But we have to because the reality is that they want out. Who wants in? Who wants to expand? Who wants to be tomorrow’s start ups? The secret isn’t to cut a deal to keep yesterday’s big dogs in Illinois. The secret is to create a state where tomorrow’s big deals want to be born. Illinois is not that place. That is the problem. Curse all you want at CME and yesterday’s big dogs, but they are struggling against a future where they are losing their place. Sears is gone and has been replaced by Walmart. The 20th Century is gone and has been replaced by the 21st. Time is moving on. Depending upon a deal in order to keep companies in this state clearly exposes this state as a loser. Kvetch all you want about the decision makers, it has been the fault of the political decision makers that has prevented the needed market changes reflective within our state policies that have proven obsolete. You cannot florish with the attitude that you do not want someone nobody sent. And that is how Chicago has worked for over a Century. That attitude won’t win the future. - Plutocrat03 - Monday, Jun 13, 11 @ 6:02 pm: “low ratio of state employees to population” Not when you add all 7000 units of government to the working pool - soccermom - Monday, Jun 13, 11 @ 6:14 pm: Rich, I have offered to reciprocate many times. - truthteller - Monday, Jun 13, 11 @ 9:46 pm: Which program should be cut or which tax should be raised so we can give CME a tax break? - Michelle Flaherty - Monday, Jun 13, 11 @ 10:03 pm: VM, isn’t United expanding? Navistar consolidated here from other states. Pluto … so you’re against local control and prefer Springfield have more power? Hey, that’s the Mitch Daniels Indiana way. Forget local input, the state knows best. As we saw with links “base closure” bill, no one’s really ready to step up and start shutting down local government layers. - wordslinger - Monday, Jun 13, 11 @ 10:39 pm: VMan, you have to upgrade your game if you want to be taken seriously. The Fox and Friends coffee klatch stuff doesn’t cut it. I wish I could say you’re peddling Econ 101, but your game is not that sophisticated. Whatever. I remember you have kids. I hope they’re doing well Best to you and yours. Sorry, comments for this post are now closed.