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* This didn’t get a lot of play during my break, but CME Group sure seems to be sounding more serious about moving out of Illinois…
CME Group Inc. is evaluating whether to move some operations to other states from Chicago to reduce its taxes, but it has not decided on an exact timeline, CEO Craig Donohue said Thursday.
“Our tax situation is untenable,” Donohue told Reuters, noting that CME is taxed more heavily than any of its global competitors. The company is talking with at least three states — Texas, Florida and Tennessee — about relocating some of its business to take advantage of lower tax rates there, Donohue said. […]
CME has no specific time frame for moving, Donohue said, and does not plan to shut its Chicago-based trading floor. But he said the possibility of moving other operations is real.
“I don’t think CME group is different from other companies” that relocate to more “hospitable” business environments, he said.
Oy.
posted by Rich Miller
Monday, Aug 1, 11 @ 12:12 pm
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They are bluffing.
Illinois/Chicago/Cook is one of the best places in the country to do business, with its low taxes, educated work force, and high quality of life.
Where the heck are they going to go…Indiana? Wisconsin? Those places will be like Mad Max in a decade with the draconian cuts they are making to their state budgets.
Call their bluff now. Otherwise every other company in Illinois is going to “want theirs”
Comment by Leroy Monday, Aug 1, 11 @ 12:24 pm
Leroy,
You are like many commenters on here who wish to stick their head in the sand and pretend like everything is Okay and Illinois is still great.
The drumbeat of business leaders who continue to sound the alarm about Illinois is reaching a feverish pitch, but you continue to think they are all stupid and just don’t understand how great it is in Illinois.
Keep dreaming while our employers flee.
Comment by Old Milwaukee Monday, Aug 1, 11 @ 12:32 pm
Phony accounting in state budgeting, unfunded pension obligations, out-of-control governor, unrealistic revenue projects, rising tax rates with a potential for more, special deals for favored businesses and individuals. All these things add to uncertainty for businesses, and high operating costs. A tipping point may have been reached that negates the “benefits” that Leroy thinks exists.
Comment by Cincinnatus Monday, Aug 1, 11 @ 12:35 pm
The truth is somewhere between Leroy and Old Milwaukee’s posts. The positive ratings on Illinois don;t just come from DCEO flacks but from organizations outside our state, so that’s some validation of the positives. CME’s saber-rattling does smell of the same extortionate-looking bargaining moves of Sears and others. I caution against just rolling over; any concessions have to come with contractually solid guarantees and give-backs if they try to skip out on their responsibilities.
Comment by Gregor Monday, Aug 1, 11 @ 12:42 pm
The horse is out of the barn regarding big (at least dollar wise) employers. Those who ask, get.
No one will be knocking on any doors to offer givebacks. A responsible CEO figures out how to make the ask.
Don’t be so sure that other states do not have a hospitable climate. Austin, TX for one is a great town with a lot of University related plusses with less political baggage. Is anywhere perfect? Probably not.
Do other places tax less? Maybe.
Reading the local paper today, it seems that Max Max is arriving in Chicago earlier than the other states. (230 homicides as of 7/27)
Comment by Plutocrat03 Monday, Aug 1, 11 @ 12:49 pm
Just so I understand this correctly, because I’m sure I probably don’t, the “untenable tax” issue has something to do with the fact that, unlike other businesses, CME Group has little or no way to earn legal tax deductions. Therefore, they pay the full corporate tax amount and they’d like either a lower rate or more ways to shield their business income from taxes, right?
If that’s correct, it’s kind of an indictment of the tax breaks nearly every other major business enjoys in Illinois. I’d support reducing the corporate tax rate by eliminating all of the corporate loopholes.
Even better, let’s hope the bi-partisan commission in Washington does something to end all of the ridiculous schemes set up to help corporations hide their actual income to avoid taxes. It would bring in more revenue without “raising” anyone’s tax rates. That should be a no-brainer, but nothing in that town is easy.
Here’s a very good column about tax breaks as indulgences from the Economist:
http://www.economist.com/blogs/democracyinamerica/2011/07/tax-expenditures
Comment by 47th Ward Monday, Aug 1, 11 @ 12:55 pm
Second 47th Ward’s comments. And note that the CME, the birthplace of the Tea Party, is probably less likely than most enterprises to see the community benefits of Chicago and more likely than most to be sensitive to being stiffed in such a way. So take their threats seriously.
Washington deserves even more criticism than Springfield on this issue. I wouldn’t be entirely surprised if CME pays more in state than in federal taxes, as the loopholes in the federal system are several times larger than what’s actually left of the tax liability.
Comment by Angry Chicagoan Monday, Aug 1, 11 @ 1:10 pm
47th is exactly right. At least it’s refreshing to hear a company that actually pays taxes complaining for once.
Comment by Small Town Liberal Monday, Aug 1, 11 @ 1:12 pm
While driving into the big city today, heard three radio ads on WGN from the State of South Dakota. “We’ll let you keep your hard earned profits.”
The drumbeat continues.
Comment by Louis G. Atsaves Monday, Aug 1, 11 @ 1:18 pm
Notice that the 3 states they specifically mention have no individual income tax? (OK, OK, Tennessee taxes interest and dividends, but that’s in the state constitution, which is a valuable protection). They’re not trying to avoid tax on CME, they’re trying to avoid taxing the compensation of their highly-paid employees.
Comment by Pat Robertson Monday, Aug 1, 11 @ 1:19 pm
South Dakota? Not to belittle the loveliness of their landscape, but landscape is basically all they have. I just can’t see a lot of CME employees willingly moving to SD.
Comment by Cheryl44 Monday, Aug 1, 11 @ 1:37 pm
You many not need to have that many employees move…
Comment by OneMan Monday, Aug 1, 11 @ 1:55 pm
I think they would only move enough of their operations into another state to significantly reduce their tax liability. I wouldn’t be surprised of a move similar to those companies that are located in Chicago but have a “sales office” in the middle of nowhere to take advantage of the lower sales tax rates. Would some employees leave? Sure. The majority and the high income employees? Probably not.
Comment by Anon Monday, Aug 1, 11 @ 1:59 pm
In due time CME will be all about protecting the personal tax interests of its soon to be few employees. The money market games are played by computers more and more, and some time in the future the “employees” will be nothing more than the executives, the hardware and software geeks, and the janitors.
Comment by Precinct Captain Monday, Aug 1, 11 @ 5:43 pm
If they cannot afford to pay a reasonable amount if taxes, then they should move and be replaced by someone who can and will pay. And the state and its citizens should keep track of which companies are willing to support the state and which aren’t.
Comment by cermak_rd Monday, Aug 1, 11 @ 5:48 pm
===and be replaced by someone who can and will pay===
Yeah. Like a corporation the size and scope of CME comes around every day.
Comment by Rich Miller Monday, Aug 1, 11 @ 6:00 pm
Yeah, CME does pay state corporate income taxes, unlike most big Illinois corporations. They’ll get their deal.
Their members have a lot invested in Illinois. They’re not going to pick up en masse and depart. They must be talking about some back of the room operations. Still, I don’t know how much that gets them.
The world’s trading floors are in New York, London, Chicago and Tokyo. Not exactly low-tax enclaves. Nowadays, you can trade from anywhere. That crowd likes the big-city life.
Louis, South Dakota is South Dakota for a reason.
Comment by wordslinger Monday, Aug 1, 11 @ 8:04 pm
“Call their bluff” and “be replaced by someone who can and will pay” are not sound policies. A hospitable environment shouldn’t mean we need bribe companies with their own tax money either.
Comment by Allen Skillicorn Tuesday, Aug 2, 11 @ 7:14 am
“Call their bluff?” Terry Duffy drives a Bentley because guys like you used to call his bluff when he was a small trader at the CME!
Comment by Reyray Tuesday, Aug 2, 11 @ 9:16 am