Springfield Ready to Hand Over $300 Million to CME, CBOE, Sears

The Illinois legislature has apparently reached an agreement on the CME/CBOE/Sears tax breaks, the Tribune reports. The Illinois House Revenue Committee endorsed a new package this morning, which is expected to move to the House floor this afternoon.

The breaks in the package will cost an estimated $218 million per year, and with the breaks for individual workers included, could jump up to $350 million, Rep. John Bradley (D-Marion) said. Sears will receive tax credits worth $15 million annually for the next decade as well as a break on property taxes for the next 15 years, which would save them $125 million. The tax code for financial exchanges will be revised so that only 27.54 percent of electronic trades will be taxable, giving an estimated $85 million to CME and CBOE. The deal also includes $3.5 million in breaks to downstate company Champion Laboratories, Inc.

The deal also includes an increase in the earned income tax credit for low and middle income workers and families as well as a raise of $50 in the personal tax exemption on state income taxes.

If the deal passes, it will be a victory for big business in Illinois, who have been essentially holding the state hostage by threatening to move out of state unless they receive big tax breaks. Business Week reports Illinois Chamber of Commerce president Doug Whitley said “In January, the Illinois General Assembly overreached and sent a message of anti-business signals. This is a positive message that says, ‘We hear you.’” Positive indeed, for any business wishing to demand a state billions of dollars in the hole give them a tax break. As Kent Redfield, a political scientist at University of Illinois points out, “…it opens the door to the next business and the next business and the next business. It makes good political sense but it’s not sound financial policy.”

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By aaroncynic in News on December 12, 2011 1:40 PM 0 Comments

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Petruce_Carrier

I believe the term some of you are searching for here is 'fiduciary duty'. These corporations have a responsibility to their investors to maximize their profits and if that means fleeing a municipality/state to do so... then they are obligated to explore that option.

PS: Our tort system isn't exactly the most business friendly either.

furytrader

"If the deal passes, it will be a victory for big business in Illinois,
who have been essentially holding the state hostage by threatening to move out of state unless they receive big tax breaks."

So, the ability for companies to choose whether to stay in Illinois in response to an increase in income tax is "holding the state hostage"? Really?

What then do you call the ability for the state to impose any tax it wants and either force you to pay it or remove your license to do business? A kiss on the cheek?

Tafter

So are you claiming the state doesn't have the right to impose and enforce taxation of businesses? Do we have a creative constitutional scholar on our hands a la Ron Paul?

Navin is absolutely right: this is a race to the bottom. The big businesses can use their clout to exempt themselves from any new taxes. Small business have to such clout and are forced to pay. Big guys win, little guys lose.

So let's just lower the tax rate, right? Get rid of pesky regulations, right? Oh how I wish we were the utopia that is Texas!

...

Though...you do realize that low, low tax rate comes at a cost, don't you? That Texas has a Texas sized poverty rate? That they have one of the lowest percentages of insured citizens in the country? And even with all of their supposed thriftiness they are still facing a shortfall?

This is an issue of fairness. As states "compete" for businesses with perks, incentives and low tax rates, *someone* is paying for the states services and upkeep. Increasingly, that is the little guy and big business is getting off scot free. As much as the OWS movement annoys me in general, they are dead on in their critique of this sweetheart deal to keep headquarters in IL. It sucks, it sets bad precedent and it reinforces the notion that big business, specifically, is so important that we need to let them run over citizens and the state to keep them happy.

Raw deal.

furytrader

My point was that as much as the state has the power to levy taxes, businesses have the power to decide in which states they want to do business. Deciding that you prefer not to pay increased state taxes is not holding a state "hostage" (to use the author's excited language) - it's every individual and business's right to decide where they wish to reside and do business.

That being said, I certainly don't like the fact that Sears and the CME Group are able to do things like this while some lady running a floral shop in Bollingbrook cannot. It speaks a lot to the political process in Illinois (and the political will of our state's politicians) that this kind of stuff happens.

Tafter

I hear you. But it doesn't just happen in Illinois. This state vs. state mentality is just bad for the country. And this even extends down to the local level.

When I was in high school, the first Walmart opened up in my small hometown. My city is very near several other small cities and is surrounded by an unincorporated county area. All of the towns competed for the new Walmart going in and my town won with a sweetheart tax deal plus some kind of construction incentive.

In the end, all of the cities lost. My city certainly saw an initial bump in tax revenue, but that was quickly offset by losses from their collapsing downtown. The other cities had no bump in revenue and saw their downtown businesses collapse as well. The sweetheart deal with Walmart ended up costing the city tax revenue in the long run.

It may be tempting to cast this solely as a big-retailer vs. small business story, but in my mind that misses the larger point. The problem is that our government, at many levels, sees big corporations and businesses as potential saviors (more jobs, more taxes, more sales, more business!) and frequently cut deals with them that in the end hurt their citizens. I think this needs to stop, from small town America up to congress.

The idea that competition among governments to lure business is bankrupt, IMO. The sooner we realize it and start working together instead of against one another, the faster we will solve our problems. We aren't talking the US vs. China here. We are neighbors, we are friends, we are Americans. The fact that we are pitted against one another to please corporations is a huge, huge problem.