CHICAGO - MARCH 17: A logo for the Chicago Mercantile is displayed in the lobby of the exchange March 17, 2008 in Chicago, Illinois. Stocks plunged today at the market open due in part to news of the near collapse and takeover of Bear Stearns. (Photo by Scott Olson/Getty Images)
You know a big business tax cut is a bad idea when not even Republicans will vote for it. That’s the status of Mayor Rahm Emanuel’s proposed $60 million break for the Chicago Mercantile Exchange, which is threatening to leave the Illinois unless the state exempts it from taxes on electronic trades.
“We certainly recognize that CME is important to Chicago and the state’s economy, but small and medium size businesses leave every day,” Patty Schuh, a spokeswoman for Senate Minority Leader Christine Radogno, told the Tribune. “We need to step back and evaluate how to help everyone.”
As in, not just businesses who gave $200,000 to the mayor’s campaign. The Republicans seem hip to the fact that this tax break is a reward to a big Emanuel contributor that will cost the already-broke state millions of dollars.
According to Reuters, even some traders think the deal is rotten.
Floor traders queried on Tuesday said the way the tax break is structured makes them nervous, because trading is already migrating away from open outcry and to the computer screen. If electronic trades get a tax break, they said, exchanges will have even less of a reason to promote face-to-face trading.
“It’s just another nail in the coffin for the floor,” said Chess Obermeier, a veteran corn options broker and trader at the Chicago Board of Trade. While nearly all CME futures are traded electronically, about 70 percent of options are still bought and sold on the trading floor.
“It’s not going to have a big impact on us but it keeps pushing the momentum away from the pit,” he said.
Even Leonard Cohen knows this deal is rotten!
The Merc tax break is Emanuel’s top priority for the General Assembly’s fall veto session. If it fails, he’ll be 0-for-2 on big legislation in Springfield. In May, Emanuel lobbied hard to pass the gambling expansion bill, only to see it killed by Gov. Pat Quinn. He’s learning one of the frustrations of being mayor: you’re all-powerful inside the city, but often, your power means nothing beyond the city limits. Frankly, Emanuel has more influence in Washington than he has in Springfield.
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