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* Negotiations are proceeding on tax breaks for CME Group and CBOE, which have both repeatedly threatened to move operations out of state…
The proposal, which leaders want to push during the veto session that starts Tuesday, would rewrite state law to tax the exchanges only on trades or sales that occur in Illinois, said Senate President John Cullerton. Today, they must pay taxes on all trades, regardless of where the seller or buyer is located. The proposal thus would exclude the many electronic trades that pass through the exchanges from out-of-state parties.
“We’re close,” Mr. Cullerton, a Democrat from Chicago, said in an interview. “They make a strong argument for a correction. Now, it’s just a matter of it’s highly technical and we’re just trying to figure out a way to attribute the sales.”
Nonetheless, Mr. Cullerton said that there’s no agreement with CME yet because it’s not clear yet what the amount of the tax reduction might be.
CME Executive Chairman Terrence Duffy has contended his company pays more in Illinois corporate taxes than any other, including larger ones such as McDonald’s Corp. and Boeing Co., shouldering a disproportionate 6% share of total receipts. The issue came to a head when the state increased the corporate tax rate earlier this year to 7% from 4.8%, boosting CME’s annual expense by $50 million, he said.
The other question would be how this impacts the state budget, which is in better shape than last year, but still far from great. Then again, if CME and CBOE did follow through on their threats, the budgetary impact would be traumatic. Still, are the companies going to make any new Illinois investments in exchange for a break? That’s usually part of any deal.
* Of course, it would also help if the governor and the mayor were on better terms. For instance…
They’re at it again.
After United Auto Workers announced Tuesday that employees nationwide had outvoted local workers and approved a new Ford Motor Co. contract, Mayor Rahm Emanuel and Gov. Pat Quinn staked their claim to the resulting 1,200 jobs in Chicago — in separate statements. […]
When the Ford jobs initially were on the table before workers ratified the deal, Quinn appeared cool to Emanuel’s celebration. Quinn publically said it wasn’t a big deal who gets credit, but his staff clearly wasn’t thrilled that Emanuel jumped out in front of the news.
And…
A carpenters’ union has a tentative accord with the city of Chicago over labor reforms at McCormick Place, but no deal has yet been struck with Gov. Pat Quinn.
“We have an agreement with the city of Chicago and Mayor Emanuel, and we continue our discussions with Gov. Quinn,” a spokesman for the Chicago Regional Council of Carpenters confirmed Wednesday.
Mr. Quinn’s office was not immediately available to comment..
* In a related story, despite Sears’ well-known financial problems, the company claims that at least 15 states besides Illinois have offered incentives to move its headquarters and its 6,000 jobs from Hoffman Estates. And the company is pushing back against the naysayers…
Sears insisted that its balance sheet is strong and it generates significant cash. As with most retailers, an overwhelming bulk of its business happens in the fourth quarter, Brathwaite said. […]
Despite its financial problems, Sears Holdings still ranks No. 52 on the Fortune 500 with more than $43 billion in revenues reported in fiscal year 2010. Sears employs about 6,100 people at its Hoffman Estates headquarters and 20,000 statewide. Its 1992 relocation invested about $200 million into local infrastructure and aided in the development of the Prairie Stone region, Brathwaite said.
Sears also is a major taxpayer in Illinois, to the tune of about $213 million last year and billions over the last 20 years, Brathwaite said.
“We’re an economic development engine for local businesses, with 9,000 in-state vendors, 30,000 hotel nights and meals, and 18,000 plane tickets in and out of O’Hare (International Airport) for visiting associates alone, with 100,000 people visiting our campus every year,” Brathwaite said.
* But the Tribune wants the state to slow down a bit…
Illinois hasn’t exactly encouraged its employers to stay home. An income tax hike and an appalling failure to deal with the state’s massive debt — starting with its pension obligations — make moving a more attractive option. Sears is going to weigh its costs. One factor in Illinois’ favor is that Sears, like any business, will calculate the cost of business interruption and attrition of its talented workforce against the benefits of incentives being dangled by other states. There is a home field advantage.
Sears says it must know soon where Illinois stands. We understand that. This competition will move forward, with or without Illinois. The local governments should be negotiating with the state and each other on the terms of a new EDA. This matter can’t drag.
Don’t ram this down the throat of the local schools, though. That’s hardly the neighborly thing to do.
* Speaking of the locals, this court ruling is sure to send shivers down the spines of a whole lot of not-for-profit operators here…
The Illinois Supreme Court let stand a decision by the Quinn administration to take away the property tax exemption of the Downstate retirement community affiliated with a Lutheran social services agency.
In a little-noticed case, the court has declined to hear the appeal of Meridian Village Assn., a 100-unit development that opened in 1999 in Glen Carbon, about 20 miles east of St. Louis.
Meridian, which was seeking to avoid paying about $161,000 in property taxes in 2000, provided just $30,000 in financial assistance to residents, according to an order issued earlier this year by Illinois Appellate Court in Mount Vernon. The appellate court ruled that the development was not entitled to tax-exempt status either as a charitable or a religious institution, upholding the position of the Illinois Department of Revenue.
The case is another example of how the department — and local officials — are taking a hard-nosed approach to property tax exemptions for non-profits. Operations providing minimal charity are especially vulnerable to losing their tax-exempt status. The state supreme court’s decision is particularly a warning to non-profit hospitals and other health care providers, which are battling in the courts and in the Illinois General Assembly to maintain the long-held benefit, which is possibly worth millions of dollars a year.
* Related…
* North Chicago mayor hopes Abbott breakup isn’t another Hospira: North Chicago Mayor Leon Rockingham Jr. said he hopes a split doesn’t mean that one company will leave, recalling that Hospira Inc. took its operation, along with hundreds of jobs, to Lake Forest after it spun off from Abbott in 2004.
* Ford deal OK’d that brings 2,000 jobs to Chicago
* Existing home and condo sales up, prices down in Chicago area - Median prices decline 8.6% to $160K outside of Chicago. Chicago prices climb 5.6% to $190K
* Leading indicators rise modest amount in September
* Tribune bankruptcy judge ‘days’ from deciding case: report
* Groupon to scale back IPO
posted by Rich Miller
Thursday, Oct 20, 11 @ 10:43 am
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Loss of property tax exemption for non profits will be devastating to most of them–and, coupled with their late payments and substandard rates for services, could put some out of business. The property taxes for just 6 of our community providers would total $1,618,000 a year!
Comment by gathersno Thursday, Oct 20, 11 @ 10:59 am
These property tax stories are often cast as the Illinois Department of Revenue cracking down on abuse of the charitable property tax exemption. Please note county Boards of Review are going after the “charities” that claim the property tax exemption while providing minimal charity care. Revenue is simply upholding the decisions of the county Boards of Review.
Comment by SAP Thursday, Oct 20, 11 @ 11:01 am
–The proposal, which leaders want to push during the veto session that starts Tuesday, would rewrite state law to tax the exchanges only on trades or sales that occur in Illinois, said Senate President John Cullerton.–
I’m not sure what that means. Technically, all the trades occur in Illinois, regardless of where the buyer and seller are located. The “exchange” takes place here.
Cullerton says “we’re close” but he can’t put a dollar figure on the tax break. How can you be “close” and not know that?
Sounds like taxpayers are close to getting rolled by two wired, highly profitable, big-time campaign contributor, heavy hitter businesses that had no intention of moving anything, anywhere.
Meanwhile, the state continues to borrow money from nursing homes and universities.
Bang those drums!
Comment by wordslinger Thursday, Oct 20, 11 @ 11:09 am
Wordslinger -
As per usual, I can’t add anything to what you’ve already said.
And as a sidenote: I’ve enjoyed your comments here for the past year and always look forward to your analysis of whatever is going on. It’s encouraging to me to see someone as well respected as you on this board loudly and frequently supporting OWS (or OC? Is that what they’re calling it up there?). I’m holding off on my full throated “Bang those drums!” as a relative newbie, but I am 100% with you. My kids and I will be up in Chicago to (metaphorically, though possibly literally) bang some drums on Saturday. This potential deal should be issue #1 for the protesters, as it is precisely the kind of shenanigans they are trying to highlight.
Comment by Colossus Thursday, Oct 20, 11 @ 11:24 am
The Trib’s a hoot. “An income tax hike and an appalling failure to deal with the state’s massive debt” Don’t they see that the income tax hike is itself an effort to deal with the state’s debt?
Comment by Elo Kiddies Thursday, Oct 20, 11 @ 11:32 am
What a bunch of suckers!
Whose next?
Comment by Bill Thursday, Oct 20, 11 @ 11:34 am
Sorry,
Who’s next?
Comment by Bill Thursday, Oct 20, 11 @ 11:37 am
==Word= Exactly! I am having a little difficulty understanding this. Amazon left because they would have to pay higher taxes on orders if their headquarters was in Illinois. As I understand it that means if a guy in Hoboken ordered a “Budgeting for Dummies” book they paid the higher taxes as if it were ordered by a guy in Springfield. (not likely that would happen)
So if gal in Memphis makes a trade how is that different than the guy in Hoboken buying the book?
Comment by Irish Thursday, Oct 20, 11 @ 11:40 am
The worst part about this whole business income tax issue is that the “big boys” get all the breaks while the small business owner with 10 or 20 employees has no political leverage to get a sweetheart tax incentive. It really puts the little guy a a tremendous disadvantage, especially when it is impossible to pick up and move out of state. Frustrating is an understatement!!!!!!!!!!!!!!!!
Comment by Boondocks Thursday, Oct 20, 11 @ 11:43 am
If CME ends up getting a tax bill that is comparable to other businesses of it’s size then this fair. If their bill is lower than comparable companies then it’s unfair. This is the rational way I will evaluate, anything else is nonsense.
Comment by John Galt Thursday, Oct 20, 11 @ 11:43 am
Perhaps the State Legislature would be so generous as to offer what pct of Revenues or Profits is necessary to obtain a Property Tax Exemption.
Until then, we can expect the usual rounds of fundraising/shakedowns by politicians lording over private charities.
JBP
Comment by JP Thursday, Oct 20, 11 @ 11:46 am
Medical facilities who do very little charity but who avoid paying taxes by claiming a charitable exemption are playing on an unfair playing field with for-profit medical facilities. I for one am glad they are being ferreted out. It’s really not that much different than the guy in Lake County who turned his home into a church to avoid paying home property taxes. If you are truly doing significant charity work then I have no problem with the tax exemption. Otherwise, welcome to the tax rolls and relieve the burden on the homeowners.
Comment by Jake From Elwood Thursday, Oct 20, 11 @ 11:52 am
I suspect a lot of folks would be surprised to see the salaries and perks enjoyed by management and employees at some so-called “non-profits.” The historic lack of oversight has created a multitude of “non-profits” which are merely fronts for lucrative enterprises. Hopefully, authorites will not throw the baby out with the bathwater as they try to clean up this tax-exempt category.
Comment by Cook County Commoner Thursday, Oct 20, 11 @ 11:59 am
I would suggest you take a look at how Sears stock has done in the last year vs. it’s peer group
https://www.google.com//finance?chdnp=1&am
p;chdd=1&chds=1&chdv=1&chvs
=maximized&chdeh=0&chfdeh=0&
;chdet=1319140800000&chddm=98925&
chls=IntervalBasedLine&cmpto=NYSE:JCP;NYSE:KSS;NYS
E:M;NYSE:WMT&cmptdms=0;0;0;0&a
mp;q=NASDAQ:SHLD&ntsp=0
Comment by OneMan Thursday, Oct 20, 11 @ 12:01 pm
JFE,
And how much is “very little” charity?
JBP
Comment by JP Thursday, Oct 20, 11 @ 12:29 pm
Cook County Commoner, Non-profit salaries can be viewed at http://www2.guidestar.org/
Comment by The KQ Thursday, Oct 20, 11 @ 12:30 pm
When the not-for-profits have to pay property taxes, taxes for all others in the county who pay proerty taxes is reduced because the levy is allocated against all paying property owners. So look at this as economic stimulus for the region.
Comment by Fair Share Thursday, Oct 20, 11 @ 1:15 pm
Speaking of budget problems, I wonder how much Illinois Community College waste each year? Read this article from the L.A. Times. Billions spent in U.S. on community college students who drop out
California expenditures on such students over five years totaled $480 million, report says. Many students are ill-prepared for college, get too little support and aren’t helped by remediation, the study notes.
By Carla Rivera Los Angeles Times October 20, 2011
California and other states are spending billions of tax dollars on community college students who drop out before completing their studies, according to a report released Thursday.
The report by the nonprofit American Institutes for Research found that from 2004 to 2009, federal, state and local governments spent nearly $4 billion on full-time community college students who dropped out after their first year.
In California, expenditures on such students over the five-year period totaled $480 million, far more than any other state.
The report highlights a nationwide trend of increasing community college enrollment and spending but declining completion rates at the same time that state funding for higher education has dropped.
“These kinds of numbers say to states like California that our taxpayers are on the hook for substantial amounts of money and they are not getting an adequate amount of return,” said Mark Schneider, a vice president at the research center who wrote the report.
“Between legislators questioning where this money is going and consumers saying the success rates are too low, I believe we can actually build up some pressure for states to start taking action,” he said.
The report found that about a fifth of full-time U.S. community college students in the period studied did not return for their second year. In 2009, the most recent year for which data were available, about $1 billion was spent on students who dropped out, up 35% from 2004.
Eight states spent more than $25 million in 2009 on students who ultimately dropped out, with California topping the list at $100 million.
The figures include only full-time students and are adjusted to account for those who transferred to four-year universities. If part-time students were included, the costs would be higher, Schneider said.
The report did not study the reasons for the low rate of success but noted that many students are ill-prepared for college, receive too few support services and are not helped by remediation.
California’s 112 community colleges form the nation’s largest system of higher education with 2.6 million students.
On Wednesday, a state Senate subcommittee heard from a task force considering ways to improve student outcomes.
“We all would like to see the numbers vastly improve,” said task force chairman Peter MacDougall, a member of the California Community Colleges’ board of governors. “As a system, community colleges have done a tremendous job in providing access and now have to elevate the focus on success to a much higher level.”
Steve Boilard, director of higher education at the state Legislative Analyst’s Office, noted that even when students drop out, not all money spent on their education is necessarily wasted. But the report raises important questions about lost potential, he said.
“The hard job is not demonstrating that lots of community college students don’t achieve meaningful education goals, or that money is wasted; the hard part is changing those facts,” he said.
Comment by Molinechuck Thursday, Oct 20, 11 @ 1:29 pm
so, the Democrat leaders are forging a bailout bill for the 1 percenters at CME, who are also their major financial supporters.
Wonder how that will be received by the occupiers?
Comment by Easy Thursday, Oct 20, 11 @ 1:39 pm
Keep the pits in Chicago and take the computers to Dallas…then you “all might get “CME’s point. As a member I think Terry should move.
Comment by Reyray Thursday, Oct 20, 11 @ 1:46 pm
Irish - that’s not exactly correct. Amazon was, and remains, headquartered in Seattle. The issue was with their Illinois affiliates, the Illinois-based blogs and websites that direct traffic to Amazon and get a commission in return. The law signed by Quinn said that Amazon would have to collect sales tax on sales to Illinois consumers IF Amazon had a physical presence in the state. Rather than collect — NOT pay — the tax, Amazon opted to cut off its ties to Illinois affiliates. (The tax is paid by consumers but is usually collected by retailers, although Illinois residents are required to pay the tax on their own if the retailers fail to do so.)
Comment by soccermom Thursday, Oct 20, 11 @ 1:59 pm
JP-
Haven’t the courts given some guidance on what is not an appropriate amount of charity? Virtually all medical facilities have an uncollectable amount set aside for uninsured patients, so it has to be something significant above and beyond that, right?
Comment by Jake From Elwood Thursday, Oct 20, 11 @ 2:10 pm
I think their guidance has been to encourage hospitals to increase their donations to the politician of their choice to discourage further inquiries into the charitable nature of hospitals.
I could be wrong, but I have not seen legislation that addresses this.
JBP
Comment by JP Thursday, Oct 20, 11 @ 2:45 pm
“Uncollectable” is not charity. If you send a bill, its no longer “charity” it’s a business loss.
Comment by Fair Share Thursday, Oct 20, 11 @ 2:56 pm
Is the difference between the actual cost of care versus the generally low and insufficient Medicaid reimbursement considered “charity” care?
Comment by 47th Ward Thursday, Oct 20, 11 @ 3:16 pm
If anyone thinks CME is struggling to make ends meet after the tax hike they should look at their press release from July. Terry Duffy is proudly proclaiming CME’s record profits. It’s his job to play both ends but to a casual observer they certainly don’t seem to need a tax beak.
http://www.futuresmag.com/News/2011/7/Pages/CME-Futures-volumes-being-higher-profits.aspx
Comment by Anonymous Thursday, Oct 20, 11 @ 4:01 pm
* Ford deal OK’d that brings 2,000 jobs to Chicago
======
Over the objection of the Union representing that plant…
Comment by Cincinnatus Thursday, Oct 20, 11 @ 4:16 pm
With 10% unemployment, it’s hard to see why we can’t get the state and city to focus on new job creation.
This is a global marketplace and we need to focus on growing industry trends both nationwide and abroad. Jobs don’t appear through osmosis. They take forward thinking law makers, entrepreneurs, and industry leader to recognize and act upon innovation.
The initial investor inertia against emerging industry is stifling new business models. We need to be on our A Game now.
Comment by JBilla Thursday, Oct 20, 11 @ 5:31 pm
Wah, wah, wah!
When an economy doesn’t grow, the economic survivors can call the shots.
That is the breaks.
Whining about the morality of these business deals just makes you look more pitiful when you end up making them.
Comment by VanillaMan Thursday, Oct 20, 11 @ 7:05 pm
What is really pitiful is dealing with dinosaurs like Sears. Wow, we are so screwed in Illinois.
Comment by VanillaMan Thursday, Oct 20, 11 @ 7:06 pm
So does this mean Amazon’s not collecting of sales tax is then valid following the logic of the CME’s trades being outside the state?
Comment by Overtaxed Friday, Oct 21, 11 @ 7:02 am
Overtaxed, that was an incomprehensible analogy. The two issues have nothing to do with each other. Amazon refuses to collect sales tax from instate sales. CME wants to avoid paying income tax on out of state transactions.
Try not to be so dense.
Comment by Rich Miller Friday, Oct 21, 11 @ 9:35 am