CME Group Inc, which has given $22 million to Chicago-area schools and charities over the past five years, has stopped making grants through its main foundation, citing the collapse of MF Global Holdings Inc.
Investigators are still searching for hundreds of millions of dollars of customer funds that CME says were improperly siphoned off in the brokerage’s final days to plug its escalating liquidity needs.
Last month, the exchange operator said it would give former MF Global customers the entire $50 million held by CME Trust, which was originally designed to help traders caught out by a broker default but that in recent years has been a mainstay of the CME’s charitable giving.
* An interesting twist on the MF Global disaster...
Clients of MF Global who lived in Canada lost no money in the collapse. Canada’s regulations do not allow client-segregated monies to be borrowed for speculative purposes. Further, voting and lobbying laws there do not tolerate the sort of corrupt legislative lobbying that is rampant in the United States. Hence, regulators in Canada are far more independent and less affected by lobbying than the regulators in the United States.
* And my syndicated newspaper column looks at the renewed popularity of corporate tax cuts…
A massive turnaround in the Illinois House may have whetted political appetites for even more corporate tax relief. But don’t count on it just yet.
As you may recall, a tax cut plan for corporations and individuals failed miserably in the House a few weeks ago, getting less than eight votes — comically short of the 60 needed for passage.
So, the House went home for two weeks, and some intense lobbying began. When state representatives came back to Springfield, a slightly revised version of the corporate tax cut plan passed with a whopping 81 votes. The bill would grant large tax breaks to CME Group and Sears to keep them from leaving the state, as well as a few broad-based provisions.
Most House Republicans had refused to support a proposed increase in the earned income tax credit program for low-wage workers, which was included in the original plan. The Republicans were opposed — even though the program was considered a GOP idea when it was unanimously approved several years ago and signed into law by a Republican governor.
So, that provision and a small bump in the standard income tax deduction were moved to a separate bill. Gov. Pat Quinn and Senate Democrats had demanded an increase in the EITC in exchange for supporting the corporate tax cuts.
Splitting the bill into two parts meant that Democrats could mostly support the EITC while Republicans could get their corporate tax provisions. The plan worked, both bills passed and the corporate tax cut bill was signed into law a few days later.
House Republican Leader Tom Cross (R-Oswego) said he thought that the two-week break had cooled some tempers, which was probably true.
A big push by Chicago Mayor Rahm Emanuel helped, and CME Group’s well-publicized meeting with Indianapolis’ mayor about moving the Chicago-based company to that city just a few days after the tax cut bill went down in flames put added pressure on legislators in both parties.
But the day after the House and Senate had left town, Cross upped the ante by announcing legislation to roll back all of last January’s corporate income tax hike.
Cross was beaten to the punch by 24 hours, however. Some House Democrats with tough campaigns next year had introduced a bill the day before to kill the corporate tax hike by Jan. 1.
Rolling back the corporate income tax increase would cost the state budget about $900 million during the next fiscal year, based on current projections. That would be on top of the more than $360 million in tax breaks that the House and Senate approved last week.
January’s corporate tax boost has created a huge uproar in Illinois as one company after another has threatened to move away. Special tax breaks given to some companies to keep them here have only enraged other company owners who are left holding the bag.
The perception is that the connected big boys are making out like bandits while the unconnected and those who can’t move have no relief in sight.
Both the Illinois Manufacturers Association and the Illinois Chamber of Commerce have vowed to push for lowering the corporate tax rate in the spring legislative session. But lowering taxes on corporations while keeping the higher personal income tax might cause even more political trouble.
As it is, two-thirds of all companies don’t pay the state corporate income tax, partly because many small-business owners set up their companies so they pay taxes on profits via their personal income tax. Cutting the corporate rate without touching the personal rate wouldn’t help those smaller businesses.
And then there would be the understandable resentment of all the working people who weren’t getting tax breaks in these tough times as they view corporations again getting special treatment. As with most things, it ain’t as easy as it looks.
These latest proposals are probably all about election-year politics anyway. Barring some unforeseen miracle and/or a newfound desire to cut ever deeper into the state budget, there’s no way Illinois can afford to get rid of the corporate tax hike.
Instead, the governor will likely continue handing out tax breaks on a company-by-company basis, creating ever more resentment by those who are paying full freight.
* A recent example of the state’s ongoing budget problems…
A home-visiting program operated by Springfield’s Family Service Center for 70 low-income teenage parents will shut down this week because of chronic delays in state payments.
The not-for-profit center’s board voted last week to indefinitely suspend the Young Parent Support Services program — designed to prevent child abuse and promote educational success — after the state’s ongoing budget crisis led to a payment delay of six months and counting.
Federal funds to support home-visiting programs arrived on time at the Illinois Department of Human Services, but that money has been delayed because matching state funds have been unavailable.
The state says it cannot pay out the federal money until a certain level of matching state funds is reached.
* What does Sears deal do for District 300?
* Statehouse Insider: Mystery funding for Illinois business tax cut: Any time talk turns to budget cuts, Republicans cite Medicaid, the program that pays for health care for poor people. Cross said he has met with a firm that looked at the state’s Medicaid eligibility and believes the rolls are rife with people who may not be eligible. Cross believes the state can save $1 billion, much of it coming from booting those who are ineligible. There already have been problems with implementing a Medicaid reform law passed by lawmakers earlier this year, which, incidentally, was projected to save only $774 million over the next five years. Federal regulators decided earlier this year that two of the income-verification methods in the reform bill could not be used. Republicans do not believe the Quinn administration fought hard enough for the bill with the feds.