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* The CME Group/CBOE incentive package was unveiled yesterday. It’s a big one…
Chicago’s financial exchanges would see a 50 percent decrease in their Illinois corporate income tax bills under legislation introduced Monday afternoon by Senate President John Cullerton, D-Chicago. […]
Under the proposal, only 27.54 percent of income stemming from electronic trading and clearing fees would be subject to Illinois’ corporate income tax, compared with 100 percent now. A spokesman for Cullerton added that the legislation could change in the days ahead.
Michael Shore, a spokesman for CME Group Inc., parent of the Merc and the Board of Trade, declined to comment. But CME Executive Chairman Terrence Duffy told Bloomberg News earlier this year that his company paid $150 million to Illinois last year.
That’s $75 million just for CME, if you’re counting. CME claims its state tax bill rose by $50 million when the income tax was increased. So, it’ll be getting all that money back plus a whole lot more.
* But there are problems. As I told you yesterday, Cullerton postponed a vote in the Senate Executive Committee…
But, shortly after the bill was submitted, House Majority Leader Barbara Flynn Currie suggested that the bill may not be needed at all, and certainly needs full vetting.
“I’d like to see the details,” said Ms. Currie, like Mr. Cullerton a Chicago Democrat. “If there is an essential unfairness (in current state corporate income-tax law), I’d like to end it. But I don’t know if there is an essential unfairness.”
* The Senate Republicans weren’t fully on board, either…
Patty Schuh, spokeswoman for Senate Minority Leader Christine Radogno, R-Lemont, said Democrats held back the bill from a committee vote Monday after Republicans questioned the overall impact of the legislation.
“When there is an attempt to speed any legislation through, there is a possibility for error and unintended consequences,” Schuh said.
* Details…
The legislation would tax only 27.5% of electronic trades, down from 100% under current law. A vast majority of the trades on both exchanges are done electronically.
* Meanwhile, talks on an incentive package for Sears continue, but the company wants even more…
A compromise that could keep Sears Holdings Inc. in Hoffman Estates and placate the complaints of Community Unit District 300 is in the works, but whether the plan finds success on both fronts remains to be seen.
State Sen. Dan Kotowski, a Park Ridge Democrat, said Monday that he is working on a deal that would grant Sears its wish of an extension of its existing tax break, as well as penalize the company if it leaves and send more money to District 300, based in Carpentersville. […]
Sears could be looking for other incentives besides an extension of the tax incentives. [Misty Redman, Sears’ vice president for government affairs] said Monday that the company has contacted Gov. Pat Quinn’s office to ask about EDGE credits — an incentive that rewards new job creation that has been awarded by Quinn to Motorola Mobility in Libertyville and Warrenville-based Navistar, two other companies that had threatened to leave Illinois.
Sears says it will decide by the end of the year whether to move its headquarters out of state.
* Related…
* What’s Next for District 300 and the Sears EDA? - More than 1,000 D300 supporters lobbied en masse in Springfield Monday afternoon.
* D-300 students, parents, faculty protest Sears’ tax break
* Sears, District 300 Each Present Their Own “Myths vs. Facts”
posted by Rich Miller
Tuesday, Oct 25, 11 @ 8:49 am
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Previous Post: Vote “Yes” on SB1652 Override
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If the tax structure is messed up, the solution is to fix it across the board.
Giving breaks away to big players harms the far more numerous little players (oddly, this is exactly the thing the ruling party castigates the minority party of being all for).
Comment by titan Tuesday, Oct 25, 11 @ 9:20 am
Incentives should be formanufacturing/technology. How about a special break for bringing jobs back from China. India just announced an economic policy based on manufacturing ,so should Illinois.
We can easily get another casino in Chicgo to replace the CME
Comment by western illinois Tuesday, Oct 25, 11 @ 9:23 am
Sears is dying, why chase a dying company with incentive dollars? And it’s funny how CME is asking for a tax break even as the Occupiers call for new taxes on financial transactions.
I agree 100% with “titan” @ 9:20 am.
Comment by cover Tuesday, Oct 25, 11 @ 9:34 am
===why chase a dying company with incentive dollars? ===
6,000 direct jobs is why.
Comment by Rich Miller Tuesday, Oct 25, 11 @ 9:43 am
–The legislation would tax only 27.5% of electronic trades, down from 100% under current law.–
What incredibly sloppy reporting. Let’s be clear. There is no state tax on trades.
None.
The proposed legislation would in effect reduce the amount of corporate profit, not income, subject to income tax to 27.5%.
Sign me up.
Here’s to Currie and the GOPers, who appear to be calling the bluff of the exchanges.
Cullerton and Emanuel’s priorities keep shining through. CME, ComEd, casinos — what a couple of working man’s heroes. The crazy thing is, in our weird political environment, these guys are considered liberal Democrats.
The exchanges make make more money than Moses. Good for them, business in Chicago is off the charts good, and has been for a long time. That’s why they’re the biggest, most successful derivative markets in the world.
They have a huge investment in Chicago. If they could do their “electronic business” anywhere, they would have done it a long time ago.
Don’t get me wrong. The exchanges are my bread and butter. I do a lot of business on the south end of LaSalle Street. Their continued great success is to my advantage.
But I can tell you, there a lot of uber-capitalists down there who are embarrassed and ashamed by this bald shakedown. It diminishes their brand, diminishes their work, asking for a handout, like they’re some loser.
The only reason it ever came about was because Duffy and his cronies were getting pounded for the outrageous compensation of their bloated, do-nothing board. They wanted to change the subject.
As for Sears, they’re not going anywhere, except the abyss or Wisconsin (what’s the difference?).
Does anyone really buy the proposition that a going corporate concern can pick up and move 5,000 professionals and not miss a beat? Does anyone buy the proposition that an alleged player in the retail marketplace company can’t make it without state handouts?
Have we all gone crazy?
Enough is enough.
http://www.suntimes.com/business/8217748-420/cme-group-vs-gov-pat-quinn-now-its-about-saving-face.html
Comment by Anonymous Tuesday, Oct 25, 11 @ 9:46 am
I love how the well connected always seem to benefit in this city/state. Where is the stewardship? Where is the corporate citizenship?
Instead of asking the state to use the taxes in which they have paid more wisely, which could benefit them in the long run, CME asks for their money back. Not only does leadership propose that they get their money back, but they would get more in return? Unbelievable!
No one benefits in the long-term from such a deal. Short-term profits are made, but the pressure to maintain a high level of return is still there so CME will still have their thumbs applying pressure on leadership. While the Average “Joe” on the street sees this for what it is, crony capitalism, and that they are the ones holding the bag, increased tax bills, completely left out and angry.
That such a small group is able to hijack the debate and not only reduce their ante but take from the kitty clearly demonstrates how rigged the game truly is.
Put this bill to a vote and let’s see who is really for the working stiff. Voting for this would surely make a great mailer against those incumbents who did, even if it fails.
Comment by Corporate Welfare Tuesday, Oct 25, 11 @ 9:50 am
Anon 9:46 is me. In case anyone couldn’t figure that out, lol. New computer.
Comment by wordslinger Tuesday, Oct 25, 11 @ 9:50 am
Sears should be eligible for an EDGE credit under the standard program available to all companies: for creating new jobs. Not get a special deal just for holding current employment levels in the state.
Comment by walkinfool Tuesday, Oct 25, 11 @ 9:53 am
=That’s $75 million just for CME, if you’re counting=
Robbing Peter to pay Paul? I wonder what the total give away might be statewide.
“The Chicagoland Chamber estimates revenue from casino expansion would mean an additional $536 million to $785 million annually for the Education Assistance Fund, $68 million to $105 million annually for the Capital Projects Fund.” http://streetwise.org/2011/07/cover-story-illinois-gambling-expansion/=
Comment by Das Man Tuesday, Oct 25, 11 @ 9:57 am
Rich.
6000 jobs is a false number Sears is a rapidly shrinking company. It doesn’t employ that many now and is shedding jobs.
Comment by Fed up Tuesday, Oct 25, 11 @ 10:01 am
That lost revenue will have to be made up somewhere.
If they do not broaden the tax base, they will have to raise another. Of course it does not matter, since it will come out of the pockets of the general public.
Thank goodness the party of the people is in charge!
Comment by Plutocrat03 Tuesday, Oct 25, 11 @ 10:08 am
CHICAGO, July 28, 2011 /PRNewswire/ — CME Group Inc. (NASDAQ: CME) today reported that second-quarter revenues increased 3 percent to a record $838 million and operating income increased 4 percent to $534 million from a year ago. Second-quarter 2011 operating margin was 64 percent, up from 63 percent in the second quarter of 2010. Operating margin is defined as operating income as a percentage of total revenues.
Second-quarter net income attributable to CME Group was $294 million, up 8 percent compared with the second quarter of 2010. Diluted earnings per share were $4.38, up 7 percent compared with the same period last year.
Does this sound like a company that needs tax relief?
Comment by Will Tuesday, Oct 25, 11 @ 10:24 am
I don’t know all the details but if the 27.5% figure is meant to reflect IL trades, does that mean the CME would have to pay Corporate income tax on, say for instance, NY trades at the NY level, or wherever they happen to be? I would think that other states would like this to be so.
Comment by MikeMacD Tuesday, Oct 25, 11 @ 11:06 am
Will brings up a good point about CME 2nd quarter net income of $294 million. What’s a benchmark for taxes vs net income? The top of the article states CME paid $150 Million to Illinois last year (not sure if all that was taxes). On the other hand our state government dug a deep deficit hole and we are in poor negotiating position with other states. Vicious cycle. If you have lots of campaign contributions, votes, or jobs you are in a strong negotiating position, otherwise, pony up.
Comment by Mark Tuesday, Oct 25, 11 @ 12:23 pm
Corporate Welfare asks, “I love how the well connected always seem to benefit in this city/state. Where is the stewardship? Where is the corporate citizenship?”
kind of a silly question. for at least two decades, state and local governments have been chasing businesses and offering them tax incentives to locate in their area. businesses would be foolish not to listen to these offers (the company i owned was offered a 10-year tax holiday, which we took advantage of, among others, which we did not). granted, it’s a race to the bottom on the part of governments, but how is this bad stewardship on the part of business? owners and managers do everything they can to minimize their fixed costs, and lowering their taxes is only one way of doing so. but it’s one of the easiest, since even a small business with a decent number of employees is a magnet to local and state governments trying to better their area. the solution here is not to blame business. they are only acting rationally. and you’d be hard-pressed to convince one government to forego these kinds of efforts until they all do…
Comment by bored now Tuesday, Oct 25, 11 @ 1:13 pm
The trick with this kind of lobbying is to get the government to subsidize a business for doing something it already wanted to do. The joke is on us. Before it was a publicly traded company, it was the Chicago Mercantile Exchange, a club of speculators who purchased trading rights at the exchange. It was many smaller companies who built Chicago as the premier commodities exchange in the world.
Since it became a publicly traded company, with investors from all over the world, it now needs a state subsidy to survive? And people are buying this load of garbage? What a bunch of suckers we are.
Comment by 47th Ward Tuesday, Oct 25, 11 @ 1:30 pm
Bored now - you’re right, it is a silly question, but if left unanswered, it has serious implications on our society. In addition, I couldn’t agree with you more that this is a race to the bottom, being pushed more so by government, than by businesses. But if businesses are only acting rationally today, I wonder when they will stop and see that their rational behavior, in the form of lessening their tax burden and placing more of that burden on the general public (who has seen their wages decrease over the good part of the last decade), has in fact hurt them in the long run by the impending dilapidation of cheap public resources at their disposal, particularly in the form of human capital, infrastructure and our legal system, that allows them to run their businesses cost-effectively? I don’t think we can expect politicians to be this forward thinking, but business executives most certainly can be. Which begs the question, what does corporate stewardship look like today? Has it simply been reduced to employing people in a particular tax friendly region for a low cost? In addition, the most fundamental question which governments and businesses should be asking right now is, what does this race to the bottom look like 5, 10, 20 years from now?
Comment by Corporate Welfare Tuesday, Oct 25, 11 @ 4:00 pm
Unintended consequences: Won’t the tax advantage for electronic trading rapidly put all of those floor traders out of work?
Comment by Yellow Dog Democrat Tuesday, Oct 25, 11 @ 4:07 pm
We all know that when you are the geek loser in the states sweepstake, you gotta pay more for a date with a prom queen.
Comment by VanillaMan Tuesday, Oct 25, 11 @ 4:29 pm
Corporate Welfare: corporate managers are more attuned with the market value and what fund managers think than these other inputs you mention. you’d literally have to change the curricula at MBA schools to change the corporate culture here. i just don’t see them considering the long-term implications anytime soon. sorry…
Comment by bored now Tuesday, Oct 25, 11 @ 4:44 pm
Vannie,
Are you OK?
Comment by Bill Tuesday, Oct 25, 11 @ 5:11 pm
Fix the State’s pension system and they will come. Don’t fix it and no amount of corporate welfare will attract permanent jobs. Governor Sunshine does not understand this fundamental truth and never will.
Comment by wishbone Tuesday, Oct 25, 11 @ 6:03 pm
Fix the State’s pension system and they will come. Don’t fix it and no amount of corporate welfare will attract permanent jobs. Governor Sunshine does not understand this fundamental truth and never will.
-Do you seriously think the first things on a corporations mind before they decide to relocate to Illinois or add jobs is the state’s pension obligations? They couldn’t care less. It’s regulation, taxes and fees. Illinois, even after the tax increase, is still a better business environment than it’s neighbors.
Comment by Will Tuesday, Oct 25, 11 @ 6:32 pm
No Bill I am not OK.
Thanks for asking.
My phone doesn’t give me much more than a tweet until I get at my iPad or laptop. But considering what has been happening over the past year it is probably good I haven’t had access.
I want to add to the conversations here, not just freak out, and that has been hard to do.
I have been literally finding Quinn folks and blasting them. I’m phoning, calling legislators I wouldn’t normally look at, and presenting ideas to them like they’ll listen or something. I feel like there is no one who knows what to do after a decade of mass maladministration.
Rich has been helpful. He has deleted a lot of my crazy Beckian/Schultzian babbling. He has edited a lot of crazy crap.
Comment by VanillaMan Tuesday, Oct 25, 11 @ 6:33 pm
Watching Illinois beg Sears is like watching two Zombies get it on in a cemetery. It is so nasty. You don’t know what they could see in each other and all you can see is how far they have both fallen.
Comment by VanillaMan Tuesday, Oct 25, 11 @ 6:39 pm
If it’s any consolation, V-Man, at least you haven’t lost that “creative flair” in your writing that so many love and appreciate.
Comment by Anonymous Tuesday, Oct 25, 11 @ 6:58 pm
Will: I do think the unfunded pension problem is at the heart of the state’s budget problem and that in turn is a major job killer. You either revise the pensions (of current workers) or you raise taxes (even more). Corporations understand this. They are not stupid.
Comment by wishbone Tuesday, Oct 25, 11 @ 7:21 pm
A $75 million tax break for one company? Jeebus.
Instead of arresting the Occupy Chicago crowd in Grant Park, the Chicago PD should be carpooling with them down to Springfield this week when FOP shows up to lobby on the pension bill. Wow.
Comment by hisgirlfriday Tuesday, Oct 25, 11 @ 8:55 pm