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* Tribune…
Proposed tax breaks for Chicago’s financial exchanges, which could cut state tax revenue by about $70 million year or more, won endorsement from a key Illinois Senate committee Thursday morning.
But the measure continues to encounter resistance from Republicans, who are pushing for broader tax relief for business as part of any package.
And legislative leaders say Gov. Pat Quinn indicated in a meeting Thursday morning that he is not on board.
“I don’t want to be part of a perception that we are cherry-picking who we help,” said Senate Minority Leader Christine Radogno (R-Lemont) one of four members of the Senate Executive Committee to vote present. The vote was 10 yes, four present, to recommend Senate passage.
The bill, which would reportedly cut CME Group’s state income tax burden in half, is expected to come up for a vote in the second week of veto session. CME and CBOE have repeatedly threatened to pull up stakes and move out of Illinois if they didn’t get some relief. CME claims to be the largest single corporate taxpayer in Illinois, and claims that its annual income tax burden rose by $50 million after the tax was raised in January.
*** UPDATE *** Crain’s…
(T)he price tag has risen on the bill to help CME Group Inc. and CBOE Holdings Inc., hitting the $120-million-plus mark. […]
Mr. Cullerton’s office conceded that the cost of the CME-CBOE bill to the treasury has increased.
The latest estimate is that the bill would reduce state revenues $75 million a year from the CME, and $7 million from the CBOE, Mr. Cullerton’s spokesman said, with the city of Chicago losing $5 million a year. In addition, restoring the research and development credit would cost the state $25 million to $30 million a year.
Senate Republican place the cost somewhat higher: $100 million to the state each year just from the CME.
* The Question: Do you support this income tax relief package for CME Group and CBOE to keep them from leaving Illinois? Take the poll and then explain your answer in comments, please. Thanks.
posted by Rich Miller
Thursday, Oct 27, 11 @ 12:43 pm
Sorry, comments are closed at this time.
Previous Post: SB1652 – You Will Hear from Your Constituents
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Where are they going and what kind of deals have they been offered? How can the state “negotiate” when they don’t know who or what they are negotiating against? The reason CME is paying more than everyone else in taxes is because they are making more than everyone else. The are making money hand over fist. Evidently they want to make bucketfulls though.
Comment by Will Thursday, Oct 27, 11 @ 12:57 pm
Is there any foundation to this besides basically bribing a company to stay here? Does it simply amount to “we don’t want you to leave, so you can pay lower taxes than everyone else”?
Comment by Matt Thursday, Oct 27, 11 @ 1:06 pm
I voted no. I don’t think a 50% break is generous enough. If we don’t eliminate their tax liability to zero, they’ll threaten to move again in a few years and we’ll have to go through this ordeal again. Maybe we ought to give them a negative tax rate to encourage them to make as much money as possible. Let’s see Indiana top that!
More TIF money too to spruce up their buildings and protect them from the riff raff of dirty stinking hippies on LaSalle Street. What do those people want again? Why are they so upset?
Comment by 47th Ward Thursday, Oct 27, 11 @ 1:06 pm
Come one come all to corporate and bigwig giveaways for sale in the State Capitol now through November 10th.
That just about sums it up for me.
Comment by Borealis Thursday, Oct 27, 11 @ 1:07 pm
Re: the update.
That’s better, but it’s still not enough. And don’t we usually find out it’s going to cost us more after it passes? What’s with exposing this ripoff before the bill passes? Most General Assembly members don’t want to know what’s in these bills until after they’ve been signed, sealed and delivered. More liberal lame stream media and gotcha journalism from Crains.
Comment by 47th Ward Thursday, Oct 27, 11 @ 1:10 pm
Theme of the day:
“Thank you sir, may I have another?”
Comment by Anonymous Thursday, Oct 27, 11 @ 1:10 pm
Fair enough, I can see why that one was taken down.
Let me try again: If they want a break because they are the top taxpaying company in Illinois, then we will just have a new top taxpaying company in Illinois who will (wait for it) want a break for being the top taxpaying company in Illinois. Horrible policy leading to devastating precedent.
Bang those drums!
Comment by Colossus Thursday, Oct 27, 11 @ 1:12 pm
I believe in relief, just not this one. What would be the cost to just restore the corporate income tax rate?
Additionally with the Cross plan, why look at tax breaks that only businesses with expensive accountants can take advantage of, why not just look at reducing the Personal Property Replacement Tax that only business and all businesses pay? If we want to give businesses a tax break, why not do it across the board?
Comment by Ahoy Thursday, Oct 27, 11 @ 1:12 pm
I personally oppose subsidizing one business at the expense of others. This proposal is a blatant example of “crony capitalism”, something that both the Occupy and Tea Party movements could agree to oppose. One of our better-regarded Governors in recent memory, Jim Edgar, generally shied away from these kind of incentive packages - and Illinois’ economy was none the worse for it.
Comment by cover Thursday, Oct 27, 11 @ 1:15 pm
Cullerton said during this past summer’s tax hearings that any changes need to be revenue-neutral. Can someone explain how first giving away $100 million from 2 fat-cats and *then* spending $25 million more on R+D is revenue neutral?
This deal is for the dogs.
Comment by USA Patriot Thursday, Oct 27, 11 @ 1:16 pm
No special deals. No subsidies for private industry. No picking winners and losers in technology. No deductions. Broaden the base and lower the rate for all taxpayers.
Comment by Cincinnatus Thursday, Oct 27, 11 @ 1:20 pm
No, no and no. This is Illinois pay-to-play in another form.
Comment by Angry Chicagoan Thursday, Oct 27, 11 @ 1:28 pm
No special deals. No subsidies for private industry. No picking winners and losers in technology. No deductions.
Cincinnatus, you got it right. We’ve got to put a stop to this nonsense, otherwise it will just keep building and building and building….
Then, once we get this done (and finally put a stop to this nonsense), it’s onward to pensions.
Comment by Judgment Day Thursday, Oct 27, 11 @ 1:38 pm
I don’t support tax relief for a company that reported a net income of more than $750 million in the first six months of 2011. Assuming they’ll report a similar amount for the second six months, that will be $1.5 billion net income for 2011. Their purported state tax obligation of $70 million is thus less than 5% of their net income.
I wish I could get by with only paying 5% of my net income in taxes! Sounds like they’re just trying to skirt their obligations to me.
All financial data obtained from CME’s latest filing with SEC: http://investor.cmegroup.com/investor-relations/secfiling.cfm?filingID=1193125-11-212308
Comment by Patrick Thursday, Oct 27, 11 @ 1:56 pm
In reference to my previous post, I just saw that CME’s filing also includes income before income taxes. For the first six months of 2011, CME reported $1.02 billion. So the $750 net income I noted earlier is AFTER taxes. That’s only half the year, mind you.
Comment by Patrick Thursday, Oct 27, 11 @ 1:58 pm
oppose for the reasons already stated. where does it end? one company benefits while thousands of other smaller businesses with less pay for it?
Comment by Bitterman Thursday, Oct 27, 11 @ 2:05 pm
This is corporate extortion and completely insane. No more individual deals. I am all for lowering the overall tax rate and doing away with all incentives.
Im surprised how little coverage this gigantic revenue losing legislation gets in Illinois. CME is going nowhere. An exchange like theirs needs to be located in a major city. New York, London, Hong Kong, Tokyo, etc. All of their senior people have longstanding Chicago ties and with the amount of money they have, some would probably prefer retirement to moving. Junior bright, ambitious employees want to live in a major city. How many would look to bail if they were to move? Go ahead and move some of your operations to Indiana, I bet it costs the state less in taxes than this.
Anyone know if giant financial powerhouses get offered deals not to leave Wall Street? I highly doubt it.
Comment by Anon Thursday, Oct 27, 11 @ 2:16 pm
I voted no, for reasons similar to those given by others. After watching the video with Leader Cross, I wonder what the trade off is going to be with the CME and a restructuring bill as proposed by the governor.
Comment by Das Man Thursday, Oct 27, 11 @ 2:17 pm
Absolutely not!!! Governments around the world should be extracting a Tobin Tax on financial transactions and reduce this needless gambling that passes for speculation. When will government players begin standing up for the real economic producers and put the financial industry in their place.
Comment by Louis Howe Thursday, Oct 27, 11 @ 2:34 pm
What the heck - I voted yes. But I didn’t do it to be a contrarian. I remember reading Rich’s note in a recent Cap Fax that CME and CBOE contribute 6% of the corporate tax generated in Illinois. Perhaps I don’t recall that stat correctly, but it was at least close to that. Let’s assume Illinois loses the CME and CBOE. In this poor of an economy and with our track record of smoke-and-mirrors budget and a nearly year-long delay in reimbursements, can we afford to lose their business and the taxes and fees paid by their employees? Let’s also not forget that those who claim the CME and CBOE want to be in Chicago forget that a bunch of old white dudes in suits can easily pull the plug altogether and still be filthy rich. It happens all the time.
Comment by Team Sleep Thursday, Oct 27, 11 @ 2:37 pm
Let me add one quick point that I forgot to include in my initial post: I am not saying we need to give them the package they want. Perhaps it could come in at half the cost. That’s why you have to negotiate. You can’t just take the CME and CBOE at their exact word, and the state can’t draw some arbitrary line in the sand.
Comment by Team Sleep Thursday, Oct 27, 11 @ 2:40 pm
every tax paying entity should pay the same percentage of their gross income. At a time when the state raised the individual income tax giving any one a discount is just plain wrong.
Comment by Kevin Highland Thursday, Oct 27, 11 @ 2:45 pm
Oppose.
They did seem to be overtaxed relative to other companies, so I do support measures to make corporate income tax more fair across the board.
But oppose for two reasons:
1) Without offsetting spending cuts or a slight across-the-board corporate income tax hike, it isn’t revenue-neutral to the state
2) It sends a signal that Illinois is willing to negotiate with one company for a smaller tax bill, so more are likely to do this.
3) The ultimate tax bill for CME/CBOE now is lower than it was before the recent Illinois corporate tax rate hike. In a time when everyone is paying higher taxes, this doesn’t seem right.
Comment by Robert Thursday, Oct 27, 11 @ 2:47 pm
Oppose on the principle that there should be no increases in spending (which is what this is) without a corresponding increase in revenue or specified, offsetting cut.
Comment by Earnest Thursday, Oct 27, 11 @ 2:50 pm
Pigs are flying today!!!!! Finally I gotta agree with Cincinnatus
Comment by palatine Thursday, Oct 27, 11 @ 2:59 pm
Palatine,
When the government institutes a program for “fairness” it rarely, if ever is.
Comment by Cincinnatus Thursday, Oct 27, 11 @ 3:17 pm
To anon…ever heard of ICE? Atlanta. Most members would love to relocate to Ft Lauderdale or Dallas.
Comment by Reyray Thursday, Oct 27, 11 @ 3:19 pm
This company will net $1.5B and are quibbling over $75M? Money talks. How do I get a similar deal?
Comment by zatoichi Thursday, Oct 27, 11 @ 3:23 pm
My God! Either: a) I’ve had a brain-crippling stroke, or b) I shouldn’t have started on my 2nd bottle of scotch before 4pm, but I too find myself agreeing with Cinncinatus. Bottoms up!
Comment by TwoFeetThick Thursday, Oct 27, 11 @ 3:27 pm
===Broaden the base and lower the rate for all taxpayers. ===
As soon as you do that, companies that pay little or not taxes like Caterpillar will scream bloody murder, and then we gotta start this all over again.
Comment by Rich Miller Thursday, Oct 27, 11 @ 3:29 pm
NO.
This is wrong in so many ways.
Comment by shore Thursday, Oct 27, 11 @ 3:41 pm
10 year deal because of a tax hike with 3 years left.
Comment by Dirty Red Thursday, Oct 27, 11 @ 3:42 pm
Instead of giving them this tax break we can’t afford, why can’t we just give CME the Chicago casino license and let them engage in legitimate gambling?
Comment by hisgirlfriday Thursday, Oct 27, 11 @ 4:17 pm
NO. Why are giving away the revenue from the tax hike to private companies? It is getting sickening. Someone chain the doors shut on the statehouse to keep these fools from doing anymore damage to this state.
Comment by Pantry Weevil Thursday, Oct 27, 11 @ 4:28 pm
Take a look at the White Sox restaurant story today and judge for yourself how much these special deals end up costing.
We don’t like the reckless spending, the wacky D politicians, or the tax increase either. But we pay for them. They can pay too. Cost of doing business in a big city.
Comment by Park Thursday, Oct 27, 11 @ 6:43 pm
No. Unless they can show how much they truly bring the city.
Comment by Anonymous Thursday, Oct 27, 11 @ 8:14 pm
No. If Duffy needs that $120 million and counting so badly, he’d be in Springfield right now with a beggar’s cup, not golfing in Florida.
I posted this on a different thread:
A little more on this CME proposal after thoughtful conversation and 12-ounce elbow curls yesterday at the Skyride behind CBOT with some trader types.
The current proposal, as far as it can be understood, is to limit corporate income taxation to the (alleged) 27.5% of income derived from open-floor outcry and trades conducted and cleared within the state of Illinois.
Let’s be clear about one point: there is not today, nor has there been ever, nor is there proposed, any tax on transactions. Leo Malamed, Tom Donavon and Rosty carried the water for the exchanges for a long, long time, an nobody ever got to put a tax on transactions. They’re talking about income.
But consider what else they’re talking about.
By limiting taxable income to trades conducted on the trading floors, or in cubes just off the trading floors, or to offices on LaSalle Street, Cullerton and Emanuel are proposing a powerful, job-killer incentive to conduct trades from outside the state.
Under Cullerton’s proposed deal, it is in the interests of CME to take and clear trades from out of state and to limit the amount of business it conducts within the state of Illinois.
In other words, the Senate president and Mayor Emanuel are proposing that the State of Illinois enact law precisely geared towards limiting economic activity in the state, killing what jobs there are on the trading floors, and reducing state revenues derived from the a wildly successful business model that’s been operating here without a bitch for 100 years. This is what the leadership of the Democratic Party is proposing.
Have we all lost our minds? We’re in the new age of the Robber Barons, the Grey Wolves, and we better wake up before they steal the hot stove and the smoke, too.
Comment by wordslinger Friday, Oct 28, 11 @ 9:28 am