Chicago Economic & Finance News

[Nowhereman1280]

^^^ OK, to the Chicago area. That doesn't really count as Illinois.

[emathias]

Originally Posted by Nowhereman1280

^^^ OK, to the Chicago area. That doesn't really count as Illinois.

They deal with unions in Seattle all the time - it's not like Walmart where dealing with a union would be a complete non-starter. Yes, if they're going to build a whole new plant, they might prefer a non-union workforce, but I think they'd be fine with a union group as long as the contracts were well-written and created a sense of responsibility in the union for training and cost-savings instead of just defining benefits and protections.

[Tom In Chicago]

So there's no hard numbers to speak of. . . does anyone know what they pay in corporate taxes to the city?

. . .

[Nowhereman1280]

Originally Posted by emathias

They deal with unions in Seattle all the time - it's not like Walmart where dealing with a union would be a complete non-starter. Yes, if they're going to build a whole new plant, they might prefer a non-union workforce, but I think they'd be fine with a union group as long as the contracts were well-written and created a sense of responsibility in the union for training and cost-savings instead of just defining benefits and protections.

Which is exactly what is not going to happen in Chicago. The Unions in this area are completely out of control and make absurd demands on a regular basis (see the $250 fee to deliver soda at McCormick Place or the fact that a union worker needs to plug in all your cords for you). Whether or not they would be willing to negotiate with Boeing in order to secure more jobs is irrelevant because Chicago has the negative reputation as a place where the unions are out of control and the government is controlled by the unions.

Again, I know reality is probably different, but that is how our area is perceived by corporations like the one I work with. That said Rahm seems to be doing some good in convincing people he can "tame the unions" (which is a direct quote from the CEO of the Fortune 500 company I represent while he was discussion a Chicago area plant on a conference call).

I thought the Ford deal to bring more jobs here was evidence that Rahm is successfully getting the issue under control, but then the moron union members voted against the agreement and just further cemented the perception that they are unreasonable.

[alex1]

Originally Posted by Nowhereman1280

^^^ OK, to the Chicago area. That doesn't really count as Illinois.

Of course it counts...

[Vlajos]

Originally Posted by Tom In Chicago

So there's no hard numbers to speak of. . . does anyone know what they pay in corporate taxes to the city?

. . .

Not sure what you mean by corporate taxes. There is no income tax in Chicago.

[Kevin J]

Originally Posted by Tom In Chicago

So there's no hard numbers to speak of. . . does anyone know what they pay in corporate taxes to the city?

. . .

As someone said above, there is no city income tax for corporations. Corporations pay state income tax, but I'm sure that part of the deal that brought Boeing to Illinois included a big reduction, if not complete elimination, of their state income tax liability.

All the city gets from corporations is the benefit of the spending done by the company and its employees.

[VivaLFuego]

Municipalities are remitted a portion of state income tax receipts, but only on the old/baseline 3%. All of the recent income tax increase (+2%, to 5%) is kept by the state.

[Chicago103]

Originally Posted by Nowhereman1280

^^^ OK, to the Chicago area. That doesn't really count as Illinois.

Downstate or not it still demonstrates that the business taxes are not as catastrophic as some say, I still don't like the new business taxes but I am glad it is not as bad as Republicans say.

[DetroitMan]

Illinois house votes down CME, Sears tax relief
By Andrew Stern | Reuters – 6 hrs ago

The Illinois house voted down a proposal on Tuesday that would have given $100 million in tax relief to CME Group and Sears Holdings, which have threatened to move to other states.

The state house voted overwhelmingly 99 to 8 to kill the total $250 million tax relief package that proponents said spread benefits around to individual taxpayers and small businesses. Earlier, the state senate 36-18 voted in favor of the package.

Opponents in the legislature, meeting in the state capital of Springfield, objected to large companies using their lobbying influence to push for tax breaks, while smaller companies get little or no relief from steep across-the-board tax increases imposed in January.

Some Democrats said it took away too much of the proposed tax breaks intended for poor and middle-income taxpayers.

http://news.yahoo.com/illinois-house...022721368.html

[Kngkyle]

I agree with their decision. Large companies shouldn't get tax breaks just because they can throw their weight around and make demands.

But with that being said, the corporate rate probably does need to be lowered a bit.

[bnk]

I am only really worried about the CME. The Illinois house has to do something that is clear. Nothing, will not work here, the stakes are too damn high, too many jobs...

Quinn you fool why did you put us in this situ?

[Ch.G, Ch.G]

From the Sun-Times article about the Illinois Senate vote:

One Republican, Rep. Sandy Cole (R-Grayslake), went so far as to scold CME for not showing up at the hearing to answer questions from legislators despite the firm’s threats to move if state lawmakers don’t cut its $150 million state tax bill. Cole voted “present” on the package. The tax break also would benefit the Chicago Board Options Exchange, which also has threatened to move operations out of state.

“I’m really surprised they’re not here,” Cole said incredulously. “We’re talking about voting on this huge deal that they initiated … and there’s nobody here.”

A CME spokesman declined comment on the company’s absence, though the firm did put its support of Bradley’s amendment on the record.

I don't know if it's common for businesses to not show up for hearings, but, assuming it's not, then CME's absence demonstrates remarkable hubris or unseriousness about leaving.

[emathias]

Originally Posted by bnk

I am only really worried about the CME. The Illinois house has to do something that is clear. Nothing, will not work here, the stakes are too damn high, too many jobs...

Quinn you fool why did you put us in this situ?

I wouldn't be in Chicago if it wasn't for the CME. Period. In college, I had a summer internship for a company that owner numerous seats on (at the time) both the CME and CBOT. It was that summer when I grew to love Chicago and when I learned the function of financial markets. For me, Chicago and the commodities trading industry are a package deal - if one disappears, it diminishes them both.

I don't directly work for the CME or a seatholding firm anymore, but I do work in the trading industry and if the CME left a big part of what motivates me to stay in Chicago versus other global trading cities would disappear and the chances of me staying long-term would probably drop by 50-75%.

I don't think I'm alone in that regard - there are a lot of jobs that aren't directly tied to the CME but benefit from the critical mass and prestige the CME brings that would suddenly be in question if the CME were to leave. The numbers on that are really hard to quantify, but that doesn't make them any less real.

[emathias]

Originally Posted by Ch.G, Ch.G

From the Sun-Times article about the Illinois Senate vote:



I don't know if it's common for businesses to not show up for hearings, but, assuming it's not, then CME's absence demonstrates remarkable hubris or unseriousness about leaving.

They were there earlier. The week before Thanksgiving they were there and told the legislature they needed an answer by the end of the week. Given the legislature's lack of substantive action, just how much kow-towing do you expect the CME to do just to be able to get fair tax treatment of their earnings? In case you're not aware, this isn't so much about a higher tax rate for the CME as it is the fact that the tax applies to income generated by trades between two non-Illinois entities. A lot of places don't tax that sort of income because it puts an exchange at a competitive disadvantage internationally, so the CME is really just asking Illinois to help keep it globally competitive - which is something that benefits Chicago, the state of Illinois and the U.S. as a whole. As bad for Chicago as it would be for the CME to leave the state, it would be far worse for it to be at such a competitive disadvantage that it was acquired by a foreign exchange.

Originally Posted by Kngkyle

I agree with their decision. Large companies shouldn't get tax breaks just because they can throw their weight around and make demands.
...

This kind of attitude is exactly why the Tea Party is bad for America - it's too dogmatic. We NEED pragmatism, not dogma.

If the CME leaves, Illinois loses close to 100% of their existing tax revenue from the CME, and a major corporate leader, and a major feather in Chicago's cap, and all sorts of side benefits that come with a company that quite literally is the best in the world at what it does. Under your logic, we should allow that to happen because we think that we can ignore the fact that in the real world the big boys DO get most of what they want? That if we ignore it, the problem will magically go away and everything will still be alright? Grow up and get real.

[Nowhereman1280]

Good, fuck that bill. There is no reason we should be signing tax cuts into law for corporations. Especially not Sears, they are such a crappy company that they are almost a blighting influence on the area.

And Bnk, like I said, don't worry about CME, they are full of it. They are beating on their chests to try to scare people into giving them incentives. Moving to NYC or elsewhere would probably result in even higher taxes on the company and, more importantly, MUCH higher taxes on all their highly paid employees. For a company like CME their employees are their most valuable asset and right now they are all firmly rooted in Chicago. Moving would mean starting fresh in a large share of their positions and basically destroying the existing hierarchy within the company.

[Ch.G, Ch.G]

Originally Posted by emathias

They were there earlier. The week before Thanksgiving they were there and told the legislature they needed an answer by the end of the week. Given the legislature's lack of substantive action, just how much kow-towing do you expect the CME to do just to be able to get fair tax treatment of their earnings? In case you're not aware, this isn't so much about a higher tax rate for the CME as it is the fact that the tax applies to income generated by trades between two non-Illinois entities. A lot of places don't tax that sort of income because it puts an exchange at a competitive disadvantage internationally, so the CME is really just asking Illinois to help keep it globally competitive - which is something that benefits Chicago, the state of Illinois and the U.S. as a whole. As bad for Chicago as it would be for the CME to leave the state, it would be far worse for it to be at such a competitive disadvantage that it was acquired by a foreign exchange.

I read that both the House and Senate versions of the bill wouldn't take effect until June. I realize that moving corporate headquarters requires months of planning, and that CME would ostensibly like to start that process ASAP, but it's not like they're going to benefit from their tax deals tomorrow or even by the end of the year. I doubt they'd be able to relocate by June, and another bill (which it sounds like the legislators are anyway amenable to) passed before then would surely prompt CME to cancel whatever relocation plans they'd be in the midst of making (the cost of relocating being far greater than the few months put into planning that move). Saying they want an answer to a complex problem (this is not simply an issue of "being fair" to CME/Sears as you make it seem) by "the end of the week" seems just like a way for CME to assert its power/bully the legislature into accepting its terms.

I'm by no means anti-corporation, but, despite claims by the nation's highest court, they're not people or even like people; their ultimate goal is always to profit, and they will engage in whatever PR campaigns/lobbying/nasty politics necessary in order to do so. It is up to legislators, as representatives of the people, to see through the threats and figure out what is genuine vs. disingenuous.

The legislation in the Senate crashed and burned, reflecting a broad consensus, the will of a bipartisan majority. The common refrain was that the bill didn't go far enough to help "the little guys" and catered only to the demands of CME and Sears. I don't think its "kowtowing" for those corporations to continue to be part of this process while the General Assembly works out the kinks in complex legislation that affects many other smaller corporate entities and, you know, actual people.

[emathias]

Originally Posted by Ch.G, Ch.G

...
and, you know, actual people.

You know, it is actual people who are employed by the CME and would be much more directly impacted by a CME move than any other individual taxpayers. The vast majority of CME employees may be relatively well-paid, but they aren't in "the 1%."

The question of taxation for Sears is a completely different animal, and one which I'm satisfied to leave to the politicians, but how taxes get applied to a marketplace is and should be a different question than how they get applied to ordinary ventures. In many, many ways, the CME has more in common with non-profit agencies or simple industry advocacy groups than it does with a company like Sears, and the tax structure should reflect that. I know the numbers look huge, but consider that the CME, by itself, doesn't create anything. It exists entirely to enable companies to participate in more sophisticated commerce than could be done with the kind of cash market everyone intuitively understands.

Chicago doesn't have a big, year-round marketplace like a lot of European cities do, but taxing the CME would be like taxing the organizers of a farmers market instead of just the market participants. It's penalizing the people working to make the market work as well as possible, instead of collecting taxes from the companies that actually profit from that efficient marketplace. If the best organizer of a farmers market left, the whole town suffers because the market gets less efficient which increases costs for everyone - both the farmers selling and the customers buying. So it really is in the best interest of everyone to keep the costs to the marketplace as low as possible.

Sears is a company. CME is a marketplace. They're totally different animals.

[lawfin]

Originally Posted by Nowhereman1280

Good, fuck that bill. There is no reason we should be signing tax cuts into law for corporations. Especially not Sears, they are such a crappy company that they are almost a blighting influence on the area.

And Bnk, like I said, don't worry about CME, they are full of it. They are beating on their chests to try to scare people into giving them incentives. Moving to NYC or elsewhere would probably result in even higher taxes on the company and, more importantly, MUCH higher taxes on all their highly paid employees. For a company like CME their employees are their most valuable asset and right now they are all firmly rooted in Chicago. Moving would mean starting fresh in a large share of their positions and basically destroying the existing hierarchy within the company.

You and I are largely in agreement on this one.

[Nowhereman1280]

Originally Posted by lawfin

You and I are largely in agreement on this one.

Is it just me or is this becoming more common?