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* First CME started shopping itself around, and now CBOE is looking at relocating…
The parent of the Chicago Board Options Exchange has held talks with a number of governors and state officials about a possible move of its headquarters to another state after Illinois raised its tax rate, providing another challenge to the city’s status as the self-styled “derivatives capital of the world.”
January’s tax increase is seen increasing CBOE Holdings Inc.’s (CBOE) state tax bill by a quarter. Chicago-based CME Group Inc. (CME), the world’s largest futures exchange operator, is also talking about relocating its headquarters.
“We’ve had a series of meetings with people in this state and outside this state,” said Bill Brodsky, chairman and chief executive of CBOE, in an interview. “The bottom line is that we don’t want to leave Illinois, but the structure that exists as it relates to exchanges is virtually punitive.” […]
Chicago’s derivatives exchanges form the nucleus of a broader financial services sector that is also being hit by the tax rise, said Brodsky. The trading business is estimated to employ around 120,000 people in the city, and has expanded to fill the gap left by the decline of its manufacturing base. […]
“Our goal is to find a way that will remove the punitive aspects that will allow us not to move operations out,” Brodsky said. “Hopefully we will come to a solution, but if not we have many other alternatives.”
It may already be too late, but I really think we need to seriously consider repealing that corporate income tax hike.
posted by Rich Miller
Friday, Sep 30, 11 @ 3:43 pm
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Geez, what took them so long?
–The trading business is estimated to employ around 120,000 people in the city, and has expanded to fill the gap left by the decline of its manufacturing base. […]–
I’m not so sure about that, particularly the “expanding” part. I’ve been done around the exchanges for twenty years, and the Communications Revolution led to a lot of efficiencies that required fewer support staff.
The assumption is that there have been fewer jobs, not more.
Comment by wordslinger Friday, Sep 30, 11 @ 3:48 pm
wordslinger … I guess I would argue there was been a huge growth in tech jobs in the sector over the last 10 years.
Comment by OneMan Friday, Sep 30, 11 @ 3:49 pm
CBOE and CME are a big part of what makes Chicago both a world class city and an international city. Circumstances need to be such (and laws need to be changed where necessary) so they will stay. Rahm needs to exert pressure to fix this mighty business mess that Quinn has made.
Comment by Responsa Friday, Sep 30, 11 @ 4:02 pm
-It may already be too late, but I really think we need to seriously consider repealing that corporate income tax hike.-
Agreed. It’s going to get too expensive not to.
Comment by Ahoy Friday, Sep 30, 11 @ 4:08 pm
Yeah. It’s like Illinois is now seeing its own version of “Going Galt.”
Sigh.
Comment by Rich Miller Friday, Sep 30, 11 @ 4:10 pm
Corporations have it pretty good in America.
They should not take for granted all that has been done to rig the game in their favor.
If corporations want to treat the citizenry as the enemy, they should remember that ultimately the people get to vote.
Access to markets is not a given.
Comment by Carl Nyberg Friday, Sep 30, 11 @ 4:11 pm
Carl, c’mon. First of all, if they leave, they won’t care what the people think. And if they stay and the public gets angry, what are they gonna do? Elect a Communist? Not gonna happen in this country.
Comment by Rich Miller Friday, Sep 30, 11 @ 4:12 pm
A step in the negotiations. I hope we can remove “the punitive aspects” perceived by CME and CBOE. They have received a lot of special benefits in the past from governmental units here, and likely will again. I doubt it will require a repeal of the whole tax hike to make it worth their while to stay in Illinois.
Comment by walkinfool Friday, Sep 30, 11 @ 4:14 pm
Rich, what is most unfortunate is that this reaction by business is completely rational and was totally predictable. It was, in fact, predicted by a number of commenters here on this very blog when the corporate income tax hike was being discussed.
Comment by Responsa Friday, Sep 30, 11 @ 4:15 pm
Guess the Chamber of Commerce was right about businesses leaving.
Comment by Ryan from Carrollton Friday, Sep 30, 11 @ 4:16 pm
If we are going to have to end up bribing all of these corporations to stay in Illinois then what the heck is the point of the increased corporate income tax rate. We are just giving it all away anyway. Either repeal it or fix the state tax laws so that all of the corporations are paying what they owe. No deductions.
Comment by Demoralized Friday, Sep 30, 11 @ 4:23 pm
Lawmakers need to realize that ACTIONS have CONSEQUENCES. Too many legislators have never owned a business or had to meet a payroll and don’t have a freaking clue about the real world.
Comment by 1776 Friday, Sep 30, 11 @ 4:39 pm
Corporate piece is pretty small portion of the tax hike. Repealing most/all of that and leaving individual portion alone would remove justification for threats of corporate flight and “only” cost the state about a half a billion a year.
Comment by SAP Friday, Sep 30, 11 @ 4:46 pm
I’m a little confused about the exchanges reactions in one sense.
Guys like Brodsky and Duffy are big-time players, big campaign contributors in Illinois government and politics. They don’t have any problems getting access to GA leadership, the governor, Senators, mayors, etc. They socialize with them at all the usual functions.
Were they banging the drum back in the lame-duck session when this went through? I don’t recall anything publicly. They knew they were going to take a big hit. They didn’t start squawking until months after the fact.
I’m wondering if deals were greased beforehand, as in, “keep quiet while we pass this, and you’ll get your break down the road.” But “let us ride in and save the day.”
Were they
Comment by wordslinger Monday, Oct 3, 11 @ 8:12 am
if cboe and cbot are moving from chicago it would be big problem for city and it will be big mess for small business and job risk for every one i think state goverment needs to think so serios to keep jobs in illions
Comment by Raj Monday, Oct 3, 11 @ 9:10 pm