When the General Assembly’s fall veto session begins next week, Mayor Rahm Emanuel’s legislative priority will be securing a tax cut for the Chicago Mercantile Exchange.
Like everyone else in Illinois, CME Group and CBOE Holdings, Chicago’s two financial exchanges, had their taxes raised this year. Now, the Merc is threatening to move its offices to another state unless the legislature comes up with a tax break or an incentive to offset its $50 million tax increase.
Emanuel told Crain’s Chicago Business that the companies are treated “not exactly in a fair way, at least in their view.”
And their view is Mayor 1%’s view. The Merc donated $200,000 to Emanuel’s mayoral campaign, making it his second-biggest contributor, after Hollywood entertainment mogul Haim Saban. Emanuel is also a former Merc board member.
The Merc has also given $150,000 to House Speaker Michael Madigan and $90,000 to Gov. Pat Quinn. (They know the pecking order in Illinois.)
Senate President John Cullerton is now talking about rewriting the law to tax only transactions executed in Illinois, “not every electronic transaction that comes in from around the globe,” according to a spokesman.
Sun-Times business columnist David Roeder is skeptical about the Merc’s threat to leave, and skeptical that Quinn will agree to a tax cut.
Is he supposed to rewrite the corporate tax code for CME’s benefit? Is he supposed to find incentives worth $50 million a year, the extra amount CME says it must pay because of this year’s tax increases? Quinn might not have the political strength to favor a company with a 37 percent profit margin.
But it’s hard to see what Quinn can do for a company that’s not promising a significant new investment if its stays. CME already has its facilities, including a 428,000-square-foot data center it recently opened in Aurora and a renovated Board of Trade building that got $15 million in city help.
The company’s actions say it’s not going anywhere.
The company’s actions also suggest it expects payback for hundreds of thousands of dollars in campaign contributions. When you’re talking millions in tax breaks, that’s a good investment.
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