Originally Posted by sentinel
Nowhereman, when you spoke with Rahm, did the issue of CME and now CBOE threatening to leave IL come up and whether or not the City is working with those groups to stay in Chicago? I feel that the discussion has centered wholly on the state and trying to get incentives from the state to stay here, but I'm curious and a little perplexed as to why Chicago has stayed relatively dormant during the whole discussion, and how Rahm is playing his hand on the matter.
That would have been a good question to ask, but it didn't come up. However it did come up when I was talking with some people who work in the Mayor's office at another event a couple weeks ago and they basically laughed off CME's threats. Now I don't know if that indicates the city is calling their bluff or if it means "really? do you honestly think we'd let them get away?", but I am confident that Rahm has a direct line to the CEO's of those companies and can just call them up at any time to discuss it.
In all honesty there isn't much the city can do here except pick up the tab created by the state. The reason these companies are up in arms is that the state taxes went up, not because the city did anything. I don't think Rahm is about to just cut city taxes which didn't increase at all to make up for the money the state is now siphoning away. In any case the elimination of the head tax will make their relationship with the City of Chicago better at least because it will probably save them a few million a year.
I think these companies are full of shit anyhow because the entire infrastructure of the derivatives industry is firmly rooted in Chicago.
Originally Posted by lawfin
I have conflicting feelings in regard to this type of inducement. And I think many studies indicate that in the end it is not worth it; especially given that certain factors like human capital, infrastructure, connectivity etc are often deemed much more important than marginal difference in tax rates.
That being said it does lay bare the claim by many in faith in the free-market; and instead indicates the underlying truth of the US economy as it has always been a mixed-economy
Well I view it this way: Cities have two ways of competing, offering a discount to become the "budget option" or investing in their built environment or talent pool to become a "premium option". Chicago generally seems to try to take the "premium" route though that does not preclude the use of tax incentives to snag deals where the company is truly wavering on a decision.
As far as free market vs mixed market, I don't even look at it that way because competition creates inefficiencies and choice on all levels. I could care less about the term free-market and am more concerned about applying "free-market" principles to situations where they can provide additional efficiencies and choices.