* Crain’s has a story online about how Mayor Rahm Emanuel is “stepping up efforts to keep CME Group Inc. from moving out of town” because of its high tax burden. Emanuel told the magazine’s editorial board yesterday that he has repeatedly met with CME Chairman/CEO Terrence Duffy…
“They came and asked me to help them in Springfield. That’s what I’m doing,” Mr. Emanuel said. “One company should not represent 6% of the corporate income tax (payments).”
But this is what caught my eye…
The mayor declined to be drawn into a discussion of rumors that Mr. Duffy increasingly is frustrated that Gov. Pat Quinn has not yet presented a plan to help the exchange. “I’m not answering any hypotheticals,” he said, adding, “I’m working on” getting the company relief in Springfield.
I checked around yesterday and, indeed, Duffy is upset at Quinn for not getting off the dime. I called Gov. Pat Quinn’s spokesperson yesterday, but didn’t receive a return call. I’ll let you know if they see this post and want to say something.
* Duffy was on Jack Bouroudjian’s radio show yesterday and talked about moving…
“We have very viable alternatives. The traders can stay wherever they want, but the company can certainly go to wherever it suits its best interests…
“Being a good steward [of shareholders’ money] is not paying six percent of the aggregate tax bill of the state of Illinois in corporate taxes. We are the number one taxpayer in the entire state of Illinois… but we are far from the largest company in the state of Illinois.”
Duffy also explained why his company is paying state income taxes even though people are trading out of state, or even out of country…
“We dont’ know who our ultimate end user client is. They have to go through one of our [intermediaries]… so we don’t know who their clients are. So, their client could be trading out of Mumbai or trading out of Asia, but because of the apportionment laws in Illinois, we are getting taxed on all those particular trades. They have to have the mailing addresses where our clearing entity is. Our clearing entity happens to be in Illinois.”
His conclusion…
“First, they don’t deserve these tax dollars, but we are being treated completely unfairly.
Audio…
* Meanwhile, the UAW has reached a contract agreement with Chrysler. If ratified, Illinois will be in line for some new investment at the company’s Belvidere plant.
But Ford’s workers are balking…
Members of Ford Motor Co.’s UAW locals are being instructed to prepare to strike as votes to ratify a proposed labor contract have turned sour.
Rejection of the pact would undo the company’s plan to add at least 1,100 jobs through a third shift at its Torrence Avenue plant on Chicago’s Far South Side as part of pledge to hire 12,000 workers nationwide over the life of the four-year contract. […]
In the first ratification vote Tuesday, workers at one of the Ford’s two assembly plants in Wayne, Mich. rejected the pact, with 51.1% of them voting no. The UAW Local 900 represents nearly 4,000 workers in Wayne. […]
“If we strike, they will use whatever resources necessary to continue operating their plants including the use of scab labor.” [according to a Facebook post by the UAW’s Ford Department.]
But don’t panic yet…
Another Chicago-area union member characterized the strike call as a typical bargaining tactic. “Chicago is in the process of voting,” said the member. “They were picked to do an early vote with the hopes of turning it around to use as a tactic for reassurance to vote for it.”
A strike at Ford involving scab labor would be a gigantic mess for everyone involved.
*** UPDATE *** Uh-oh…
Workers at Ford Motor Co.’s Chicago assembly plant voted overwhelmingly to reject a tentative four-year contract agreement with the automaker — setting the stage for a possible national strike, said a local union official early Thursday.
Seventy-seven percent of 2,317 workers at the Torrence Avenue plant who voted rejected the contract, said Grant Morton, United Auto Workers Union Local 551 plant chairman. The plant employs 2,700 UAW workers.
With the Chicago voting results in, the contract proposal now has more no votes than yes votes nationally, Morton said.
“We were given direction earlier today to prepare for a strike,” said Morton, who added the national union’s executive board will take a strike authorization vote if the deal is rejected nationally.
But union leaders have said the Ford offer was a good deal.
* Related…
* Sears’ request for tax breaks pits town against schools
* Hoffman Estates Approves Resolution To Keep Retailer In State
* CME’s Duffy: Tax on Trading Would Raise Food Prices
* Video: Emanuel on TIF, pensions, CME and what his budget means for Chicago business
- Rich Miller - Thursday, Oct 13, 11 @ 6:53 am:
Let’s move along. It was a stupid question. I should’ve just taken my own advice and not feed the trolls and deleted it.
- hisgirlfriday - Thursday, Oct 13, 11 @ 6:57 am:
As for CME’s crocodile tears about taxation, why is it that our society constantly bashes the poor and downtrodden and unemployed when they try to get help from the government but we just accept the idea that a big company like CME deserves a hand out from us taxpayers. CME is taking the Illinois taxpayers hostage here.
I think this sense that our government has become a government of the corporations, by the corporations and for the corporations (rather than of the people, by the people, for the people) animates a lot of the underlying resentment to “the wealthy” of the Occupy Wall Street protesters.
- Aldyth - Thursday, Oct 13, 11 @ 7:10 am:
Ditto, hisgirlfriday.
- Anonymous - Thursday, Oct 13, 11 @ 7:31 am:
“As for CME’s crocodile tears about taxation, why is it that our society constantly bashes the poor and downtrodden and unemployed when they try to get help from the government but we just accept the idea that a big company like CME deserves a hand out from us taxpayers. CME is taking the Illinois taxpayers hostage here.”
How in the world is CMEs unwillingness to pay taxes on transactions which do not originate in Ilinois a “hand out?” it seems pretty clear the problem is the tax code not CME.
- hisgirlfriday - Thursday, Oct 13, 11 @ 7:48 am:
Anonymous, the CME is the facilitator of the transaction so the CME is where the transaction originates.
CME’s argument would be like if I go to a store here in Chicago and pay for my purchase with a credit card based in Delaware and then try to get out of paying Illinois/Chicago taxes on the transaction with the claim the transaction really originated in Delaware so I shouldn’t have to pay the Illinois/Chicago tax. It’s ludicrous.
- Bill - Thursday, Oct 13, 11 @ 7:48 am:
The CME should be paying more taxes. I like the idea of taxing each trade $.25 for the privilege of doing business in Chicago.
- wordslinger - Thursday, Oct 13, 11 @ 8:21 am:
Does CME have a proposal on the table? Before they knock Quinn, could we see their cards, perhaps?
- Michelle Flaherty - Thursday, Oct 13, 11 @ 8:45 am:
Perhaps Mr. Duffy should invite Gov. Quinn to be his date to a GOP fundraiser.
- wordslinger - Thursday, Oct 13, 11 @ 8:46 am:
–“We have very viable alternatives. The traders can stay wherever they want, but the company can certainly go to wherever it suits its best interests…–
If it’s that easy, why didn’t they set up shop in a no-income-tax state long ago?
If it’s that easy, why do all the world’s largest exchanges headquarter in relatively high-tax, high cost of living centers?
If it’s that easy, why does NASDAQ, which is totally electronic trading, headquarter in New York?
- soccermom - Thursday, Oct 13, 11 @ 9:49 am:
Also, the “we pay more than anybody” whine just underscores the problem — way too many Illinois corporations are using accounting tricks and loopholes to avoid paying their fair share. Losing more revenue by giving breaks to CME is not the answer; we need to figure out how to make this tax code more fair for everyone.
- Amuzing Myself - Thursday, Oct 13, 11 @ 9:53 am:
If the Governor isn’t willing to engage CME, I hope they move, as bad as that sounds. It’s going to take some serious, eye-opening, “how did that happen” moments for Illinoisans to open their eyes and realize that squeezing businesses - of any size - in Illinois is not going to fix our overspending problem. This tired “tax the corporations” line is cheap and easy class warfare and typical of politicians that don’t want to tell voters they might actually have to do without something we can’t afford. Is it going to change any time soon? Probably not without something really shocking happening - like the CME moving out of Illinois.
- wordslinger - Thursday, Oct 13, 11 @ 10:03 am:
–This tired “tax the corporations” line is cheap and easy class warfare and typical of politicians that don’t want to tell voters they might actually have to do without something we can’t afford.–
Is the term “class warfare” now part of some drinking game or something? That’s all you hear in some circles, whether it makes any sense in context or not.
I think it was pointed out as recently as a couple days ago here that most Illinois corporations don’t pay anywhere near the full corporate tax rate, and some don’t pay anything at all.
- soccermom - Thursday, Oct 13, 11 @ 10:13 am:
Word — not “some don’t pay anything at all.” It’s lots — and the biggest ones are the most likely to avoid tax.
- soccermom - Thursday, Oct 13, 11 @ 10:22 am:
I never thought I would be quoting Rod with approval, but here’s this from 2004…
“Every year, the State of Illinois provides over $1 billion in 42 different corporate tax breaks and credits. Every year, some of those loopholes help some companies avoid paying their fair share of taxes, which means hard-working men and women have to make up the difference. The average Illinois resident pays more in state income taxes than 42 of the nation’s largest corporations. And yet, despite the fact that the hard working people of this state are subsidizing some of our biggest, most profitable corporations, the very people who pay taxes and subsidize those corporations are prohibited by law from knowing who is taking advantage of these tax breaks, and how much they’re getting,” said the Governor. “If the people of this state are going to pay for tax breaks for big corporations – they ought to at least know what they’re paying for, and what they’re getting for their money.”
“Corporations who do business in Illinois, who sell goods and services in Illinois, and who make money here in Illinois, are currently entitled – by law – to an array of loopholes that allow them to avoid paying their taxes on everything from software to income sheltered tax havens.”
The Governor pointed to the state’s historic revenue statistics, which indicate that in 1980, one in every five income tax dollars in Illinois was paid by corporations. In Fiscal Year 2003, corporations paid only one of every eight dollars in income taxes. And in Fiscal Year 2005, the ratio is expected to drop to one of every nine dollars.
Of the 95 Fortune 100 companies that are doing business in Illinois, 30 paid no state income taxes at all in 2002. Twelve others that did pay taxes in 2002 paid no state income taxes in 2000 or 2001.
- walkinfool - Thursday, Oct 13, 11 @ 10:26 am:
Taxation arguments aside, a formal offer from the state, even if preliminary, should have been made to Duffy’s organization by now. If he’s hasn’t received one, then that should be rectified right now.
I suspect that substantive discussions have been held, but until Duffy sees something close to what he wants, he will believe no real offer has been made.
- wordslinger - Thursday, Oct 13, 11 @ 10:29 am:
–…but until Duffy sees something close to what he wants, he will believe no real offer has been made.–
Why doesn’t Duffy tell us what he wants?
- This Little Piggy - Thursday, Oct 13, 11 @ 10:34 am:
Words infer is right. CME should be paying for the privilege to be headquartered in Illinois.
Does anyone really think they are going to move to Milwaukee, Indianapolis, or Detroit? Please.
Kindly, but firmly communicate to CME that we aren’t callous…we feel their pain….and simply end it there.
- Amuzing Myself - Thursday, Oct 13, 11 @ 10:42 am:
So if we do away with all tax deductions for corporations, and they pay tax on every penny in profits they make each year, does that mean we’re going to PAY THEM when the economy tanks and they LOSE money in a given year? Or just take the attitude, if a business loses money, too bad. Their mistake.?
While I don’t presume corporations don’t do everything they can to pay as little to the state and federal government as legally possible (they wouldn’t be very smart business people if they didn’t), much of the “businesses don’t pay any taxes” righteous indignation seems to come out of a complete lack of understanding of expenses, profits, investment, and liquidity. A real estate development company whose owner lives in a $1,000,000 home with a 30 year mortgage and has $ 10 million dollars worth of vacant property not a single piece of which sells in a given year. How much should they pay in taxes in a given year? Since they didn’t sell anything, but still had expenses TRYING to sell property, they actually spent more money to keep the business afloat than they brought in. Still, they have a million dollar home and all those assets. Technically, they’re still a millionaire. Do they pay taxes for that year?
I have no problem ensuring taxpayers - individuals or corporations - pay what they owe. But making it more and more expensive for businesses to exist and make money (their reason for existing) in Illinois is NOT what’s going to fix Illinois’ budget woes.
This state spends more than we have to spend. You don’t fix a spending problem by scraping more money together to spend. You have cut spending down to the revenue coming in - as painful as that may be. Public safety has to be the first concern. After that, EVERYTHING has to be on the table. Until THAT happens, Illinois budget will continue to be the laughingstock of the country.
- Bill - Thursday, Oct 13, 11 @ 11:08 am:
Somebody has to call one of these guys bluffs. Otherwise it remains open season for tax breaks. CME is already making plenty.It is not like their in trouble. They can afford to pay their taxes. Did they forget what the C in CME stands for?
- Demoralized - Thursday, Oct 13, 11 @ 2:15 pm:
Amuzing Myself:
I believe the general public directs their anger at corporations partly for the example you lay out. If that business owner really does have a $1M house and $10M worth of property, he is getting an income from somewhere (presumably his company pays him a salary). If his company is doing that poorly that they are not making any money, I believe the general public looks at him and says “what the hell is he doing making so much money that he can live in a $1M house?” That’s sort of the point of the protests going on now. People want to know why these corporate tycoons are making multi-million dollar salaries and bonuses even when the corporations are supposedly not making any money or are supposedly being taxed too much. Seems to me that these corporations suck at PR.
- hisgirlfriday - Thursday, Oct 13, 11 @ 3:34 pm:
“Why doesn’t Duffy tell us what he wants?”
Exactly. Hostage-taking without a ransom note is bad manners.
- Rich Miller - Thursday, Oct 13, 11 @ 3:46 pm:
He has said what he wants. We covered this yesterday, I believe.
- Plutocrat03 - Thursday, Oct 13, 11 @ 6:48 pm:
So when you call the bluff and the leave, who get stuck with making up the revenue loss.
Those poor saps who are stuck here.
The true hostage takers are those who value business as usual over reform.
- correct again - Thursday, Oct 13, 11 @ 6:49 pm:
“CME Chairman is frustrated with Quinn.”
He’s not the only one. Is anyone happy with him? (Besides the IL Psych Association, if there is one. Business at therepists’ offices should be booming)
- wordslinger - Thursday, Oct 13, 11 @ 9:59 pm:
There’s a weirdness about the CME and CBOE alarms about the state income tax that I can quite figure out.
Duffy makes it sound like the fact that CME has an Illinois mailing address is an insurmountable obstacle to dodging state tax.
Seriously? The Chicago exchanges are over a hundred years old, multi-billion dollar enterprises, wired to the hilt and they’re tripped up by a mailing address? I just don’t believe it.
These guys had everyone in the Illinois power structure going to bat for them forever and somehow they were victimized? Geez, they had Rosty, Donovan, Leo Malamed, plus every governor, senator and mayor. How did they let this terrible thing happen to them, and why did they discover it all of a sudden?
I’ve been down in the exchanges for a long time, and I never heard anyone complain about the state income tax. Not once. The big issues were always killing any idea of a transaction tax and retaining self-regulation via CFTC.
If these guys, or any other exchange in the world, could save a buck by moving their clearinghouse out of Chicago, London, New York,
Tokyo, etc., why haven’t they done it already?