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* As we’ve already discussed, Chicago Teachers Union President Karen Lewis wants a tax on financial transactions to help fund the woefully underfunded city teachers pension fund…
William Barclay, an economist advising the CTU, estimates a $1-to-$2 tax levied on the sellers and buyers of futures, futures options and securities option contracts traded on the Chicago Mercantile Exchange and the Chicago Board Options Exchange could raise up to $12 billion a year for the state, some of which could be used for pensions.
* But the governor dumped cold water on the idea yesterday…
A financial transaction tax faces several legal hurdles, including a change in state law, a City Hall official said. And Gov. Pat Quinn also was skeptical.
“I just don’t think there’s the votes for that,” Quinn said Tuesday in Springfield. “I think that would be very difficult to do.”
* And CME’s spokesperson Laurie Bischel was completely opposed…
“However, we do not believe the way to accomplish a strong public school system is through singling out futures traders with a tax more than 200 percent higher than what the average trader pays to buy or sell a futures contract,” Bischel said. “Futures traders do not have to do their business in Chicago today and this tax would make sure that they don’t do business in our city going forward.”
Discuss.
posted by Rich Miller
Wednesday, May 7, 14 @ 10:06 am
Sorry, comments are closed at this time.
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==Futures traders do not have to do their business in Chicago today and this tax would make sure that they don’t do business in our city going forward.”==
This. They’ve come close to picking up and leaving before, I don’t see how this would not push them over the edge to leave.
Comment by Anonymous Wednesday, May 7, 14 @ 10:11 am
Never going to happen.
In the deepest point of the recession, CME was able to roll the GA for a huge tax cut, while individuals got an increase.
They can swat away a transaction tax like a bug.
Comment by wordslinger Wednesday, May 7, 14 @ 10:14 am
Saw this reading my morning news shorts and wasn’t surprised it had popped back up.
Laurie Bischel / CME makes a valid point. They can’t move in a day but building out a new infrastructure somewhere else could be done in less than a year. All the big traders would follow CME because distance = delay when it comes to trading and tenths of a second count. It would likely end up a major revenue loss for Chicago / Cook should all that spending, office, housing, etc. move elsewhere.
Comment by RNUG Wednesday, May 7, 14 @ 10:19 am
Why a 1$ or 2$ tax? Why not .10c? 1.2 billion is still a haul. CME would never leave. Never. I remember ADM making the same threat.
Comment by Lobo Y Olla Wednesday, May 7, 14 @ 10:20 am
I don’t understand why I pay a sales tax when I buy a book but I don’t pay a sales tax when I buy a financial product (like stock or an option).
Comment by Dan Johnson Wednesday, May 7, 14 @ 10:22 am
“contracts traded on the Chicago Mercantile Exchange and the Chicago Board Options Exchange could raise up to $12 billion a year for the state, some of which could be used for pensions.”
Until our philosophy changes, we won’t be able to get such revenue to help take pressure off of budget cuts. I don’t see this change happening any time soon, so we must work with what we have and keep pushing for change if we want.
I read something not too long ago about how European countries are or were supporting a financial transaction tax (a few countries oppose it). I read that the proposed tax would not be going to help social services, but to shore up banks from future collapses.
Comment by Grandson of Man Wednesday, May 7, 14 @ 10:25 am
“Traders would relocate” is given by CME as a reason not to tax these financial transactions.
The actual probability of traders moving because of a transaction tax is low. It is just another “I’ll take my ball and go home!” response to the tax. (Just like everyone is leaving Illinois because of X or Y or Z…)
The opportunity costs of moving to a new location far exceed the costs of the proposed tax.
The real truth is that CME is so connected that no politician can oppose them without destroying their own political future. This “threat” is mentioned to provide cover for elected officials to oppose the tax. The free ride continues…
Comment by vttk17a1 Wednesday, May 7, 14 @ 10:30 am
Given the massive infrastructure needs, they couldn’t just move anywhere, but there are probably five or six realistic alternatives for them, where they would also keep highly-skilled staff.
I wonder about Karen Lewis, often.
Comment by Walker Wednesday, May 7, 14 @ 10:30 am
It is a challenge to explain why something not directly related to education or to pensions, should be taxed to help either.
“Do it for the kids!” - I get that.
“Do it for our teachers!” - I get that.
“Do it for our schools!” - Um, OK.
“Do it for our teacher’s pensions!” - Um, what?
Comment by VanillaMan Wednesday, May 7, 14 @ 10:30 am
“Traders would relocate”
Traders are already all over the world as it is. The exchanges are a ghost town compared to even five years ago, and they continue to shed support jobs as communications improve.
As Walker points out, CME needs a communications infrastructure that is available in only a few places in the country, or the world for that matter.
Still, the threat of a move is enough.
Comment by wordslinger Wednesday, May 7, 14 @ 10:35 am
The battle of the heavyweights: Karen Lewis vs CME?
I’ll take CME, thank you very much.
Comment by Peter Wednesday, May 7, 14 @ 10:37 am
The state does not really need new taxes to raise revenue.
We need to enforce exisiting tax laws, fines and penalties. hire more enforcement personnel for agencies that have fines and penalties, and more auditors for the Dept of Revenue.
This is one of the frustarting sides of government. Buisness complains that they do not like being audited, and that paying the exisiting sales tax and other taxes is driving them out of buisness. in approp hearings the general assembly yells at the Dept of Revenue for enforcing tax laws against business, and threatens to reduce their funding.
So we want to bring in money, but our general assembly doesnt want anyone to actually pay it.
This is simple. Double the States auditors and lets go collect the money we are actually owed and never paid. No new taxes just support enforcing what already exists! we need to stop adding new taxes and fees when we dont collect most of what is already out there and owed!
Put more environmental inspectors, bank regulators, state police fining speeders etc etc.
We are in a bizarre self inflcited loop. We defund the collection and enforcement of exisiting fees, taxes and fines… then pass new fees and fines to makeup for the loss of what we arent collecting but are already owed…. and then cut the enfrocement programs even more reducing staff further and adding even more fines and fees to make up for it. Legitmate business then gets hammered for our failure to go after those that arent complying.
Enforce what we have and staff up the enforcement agencies.
Comment by Ghost Wednesday, May 7, 14 @ 10:56 am
Nothing like these issues to help identify the neo-Marxists out there who fail to see the simple truth that business doesn’t have to stay here in Illinois, particularly an industry that will likely go all digital in the near future.
Somebody might complain about the Marxist jibe, but really, this issue was proposed during the last election by Rich Whitney, the Green Party candidate for governor.
Rich is a nice guy and a good attorney, but he’s a left-wing loon when it comes to the economy. Karen Lewis, who has never seemed to be a nice guy or gal, often stands to the left of him.
Comment by Downstate Illinois Wednesday, May 7, 14 @ 11:11 am
–Nothing like these issues to help identify the neo-Marxists –
Or comments like that to identify the contemporary crazies.
Yeah, financial exchange transaction taxes — just like Stalin and Mao used to make. (Psst, they didn’t have financial exchanges; they were commies).
The nostalgia for the commies is deep in some. Personally, I don’t miss them.
Comment by wordslinger Wednesday, May 7, 14 @ 11:17 am
Peter: Well put.
Comment by Keyser Soze Wednesday, May 7, 14 @ 11:21 am
@Ghost10:56=Put more…state police fining speeders=
The purpose of the state police is not to produce revenue.
Comment by DuPage Wednesday, May 7, 14 @ 11:30 am
The CME and CBOE is not the only exchange in the world. Traders have their choices of exchanges. If Lewis is serious about raising more money for CPS she should propose something like a city income tax or extending the state income tax to retirement income.
Comment by ejhickey Wednesday, May 7, 14 @ 2:00 pm
==It is a challenge to explain why something not directly related to education or to pensions, should be taxed to help either.==
What would we tax to fund education that is directly related to it? For that matter, would we pay for police by a user fee tax on criminals? LOL.
Comment by Precinct Captain Wednesday, May 7, 14 @ 2:33 pm
Anyone who thinks the exchanges won’t move is sadly deluded. For $12 billion they would move as fast as they could. There are many states who realize the value of our exchanges and are always making very generous offers to lure them.
Comment by Fisherman Wednesday, May 7, 14 @ 3:21 pm
–For $12 billion they would move as fast as they could.–
Me, too.
Where do you get $12 billion?
Comment by wordslinger Wednesday, May 7, 14 @ 3:26 pm
“William Barclay, an economist advising the CTU, estimates a $1-to-$2 tax levied on the sellers and buyers of futures, futures options and securities option contracts traded on the Chicago Mercantile Exchange and the Chicago Board Options Exchange could raise up to $12 billion a year for the state, some of which could be used for pensions.”
Comment by Fisherman Wednesday, May 7, 14 @ 3:33 pm
Fisherman, sorry, I misread the original post. I though it said $1.2 billion. Mea culpa.
Obviously, it’s not a serious proposal if you’re going after $12 billion a year from those who trade at CME and CBOE.
Comment by wordslinger Wednesday, May 7, 14 @ 3:40 pm
One wonders if so called economist William Barclay has ever heard of the substitution effect in economics?
Comment by Steve Wednesday, May 7, 14 @ 4:28 pm