* CME Group is still talking to several other states about moving its headquarters out of Chicago, but there is reportedly some progress here in Illinois…

CME Group Inc. is making progress in talks with Illinois officials about a tax deal to keep its headquarters in Chicago, even as it expects to receive concrete proposals this week from five states seeking to lure the futures exchange operator away, people familiar with the conversations tell Crain’s.

CME Executive Chairman Terry Duffy met with Illinois Gov. Pat Quinn recently to discuss a new way to tax the company based on where its futures market transactions occur, the sources said.

Currently, the tax is tied to the floor trading, even though most of the company’s business is conducted electronically worldwide. The difficulty in tying the tax to those transactions is in linking them to a particular place and doing so despite confidentiality concerns.

CME Group claims to pay more corporate income taxes than anyone else in Illinois. The problem with our corporate tax is the same as our sales tax. It’s too narrowly targeted, so increases have to be high to generate revenues.

* Speaking of a narrow tax base…

About 10 pages into [Comptroller Comptroller Judy Baar Topinka’s quarterly report on the state’s finances] was a snippet that caught my eye. It was the annual “Illinois Tax Expenditures” report. Essentially, this is an annual review of how much the state gives up in tax revenue by providing tax breaks to individuals, corporations and other organizations throughout the state.

The most recent report shows the state could have collected $6.6 billion more in revenue if it didn’t offer tax breaks. That money would pay off the state’s massive pile of unpaid bills and give Quinn enough cash to avert layoffs and facility closures.

Of course, killing off these tax breaks is just about politically impossible.

The biggest tax break is a reduction in the amount of sales tax charged on certain food, beverages and medical appliances. In fiscal year 2010, not collecting the full tax meant the state didn’t reap $1.5 billion in revenue.

In second place on the tax break list is the state’s decision to not collect income tax from retirement income. That cost the state $1 billion in potential revenue in fiscal year 2010. This figure is only bound to grow as baby boomers head into retirement.

* Meanwhile, this is a legitimate concern…

Lawmakers who will play pivotal roles in setting up Illinois’ health-benefits exchange — an entity designed to make health insurance more affordable for consumers and small businesses — are among the top recipients of cash from the insurance industry.

One consumer group says campaign contributions make it likely the Illinois Health Benefits Exchange Legislative Study Committee will issue recommendations later this month that benefit the insurance industry at the expense of consumers. […]

Democrats Frank Mautino and William Haine and Republicans JoAnn Osmond and Bill Brady are co-chairpersons of the study committee, which is expected to make recommendations to the General Assembly by Sept. 30 on how the exchange should be governed and funded.

The four have served on insurance committees in the Illinois House and Senate and have received a combined total of $70,800 from the insurance industry so far this year.

You cannot be blamed for believing that this is a classic case of the fox guarding the henhouse.

* Another fox at the henhouse door? That’s what this lawsuit claims…

Noted Knoxville attorney Gordon Ball is co-lead counsel on a blockbuster case filed in the Illinois Supreme Court involving State Farm, a $1 billion class action lawsuit, and an allegedly corrupt judge. Former Senator Fred Thompson, who recently led an effort to block “tort reform” liability limits in Tennessee, is co-counsel.

According to the lawsuit, State Farm and its lawyers got an Illinois Supreme Court Justice elected by pumping $2.5 to $4 million into his campaign through PACs, and six months later the judge cast a deciding vote to reverse on appeal a $1.05 billion class action consumer fraud judgment against State Farm involving bogus replacement parts for wrecked cars.

The plaintiffs seek to have the reversal vacated and the original judgement restored to “correct a judgment obtained through fraud and concealment.” They allege that “State Farm’s extraordinary financial and political support for Justice Karmeier’s 2004 campaign created a constitutionally-unacceptable risk of bias such that his participation and vote to reverse the $1.05 billion judgment deprived Petitioners of their due process rights.” They had previously requested the judge to recuse himself from the case but he refused.

The case introduces new evidence from an investigation into the campaign contributions by retired former FBI Special Agent Daniel Reece, a Knoxville native who spent his 28-year career investigating public corruption and fraud in California, North Carolina, Tennessee, West Virginia and Illinois.

The full complaint is here.

* Related…

* House Republicans suggest eliminating state-supported Amtrak trains: According to an Amtrak news release issued Thursday evening, the FY 2012 Transportation-HUD Appropriations Subcommittee budget proposal offered by the GOP would prohibit the use of federal money to help pay for any operating costs of state-supported trains.

* State Challenging Hospitals’ Tax Exemptions: All three of the hospitals the state is focusing on provided free and discounted medical care that ranged from 0.96 percent to 1.85 percent of patient-care revenue, according to the revenue department. The state also said that each one had been operating as a “for profit” business when the state’s Constitution says that “only charities are entitled to a tax exemption.”

* Hold banks to account for their role in crisis: It’s critical that the banks not be given an unlimited pass for past transgressions – to ensure that the truth of what happened to our country is revealed and justice is not short-circuited by financial power. To date, front-line public officials appear to be holding firm. For example, Illinois Attorney General Lisa Madigan, a leader in pursuing cases to help homeowners harmed by bank abuses, recently made it clear that any settlement with the attorneys general will not include the broad waivers the banks are seeking.

* Groupon sued over unpaid overtime

* Aurora mom pickets smokeshop selling synthetic pot

* New takes on loyalty programs look to end dependence on incentives - Mobile apps, social media harnessed by startups to let merchants stay in close contact with frequent customers

* Amazon Wins Reprieve Over Charging Sales Tax: For the time being, mega-online-merchant of everything Amazon.com has gotten its way, somewhat. On Friday night, California lawmakers approved a compromise bill granting Amazon.com a one-year reprieve from charging sales tax to its customers in the state. Amazon, which has deemed the compromise bill “win-win legislation,” is to start collecting sales tax on September 15, 2012, provided there is no federal legislation passed that sets a national standard.