CBOE, CME Profits Rise as They Complain About Taxes
By aaroncynic in News on Nov 4, 2011 8:20PM
The Chicago Board Options Exchange and CME Group Inc., which manages the Chicago Mercantile Exchange, both saw huge surges in earnings in the third quarter.
The Sun-Times reports CBOE saw a 69 percent increase in earnings while CME profit rose 29 percent, according to Crain’s. Net income for CME rose from $244.3 million during last year’s third quarter to $316.1 million this year and CBEO net revenue rose to $44.7 million from $26.4 million. CBOE called the third quarter of 2011 their best in its history.
Hopefully for the two exchanges, these increases will be enough to offset the tax rates they’ve threatened to leave the state over. In September, Bill Brodsky, chairman and CEO of CBOE called the Illinois tax increase “punitive.”
"Our goal is to find a way that will remove the punitive aspects that will allow us not to move operations out," Brodsky said. "Hopefully we will come to a solution, but if not we have many other alternatives."
In another spring of good news for the two companies who feel beleaguered by taxes in the Land of Lincoln, legislation proposing tax breaks for Chicago’s financial exchanges won endorsement from a Senate committee yesterday.
The Trib reports the proposal would cut state corporate income tax for CME and CBOE in half. Illinois’ corporate income tax applies to revenues from in-state sales, so for Chicago based companies, the tax applies to every exchange, while multinational corporations only pay on profits made in Illinois. Senate President John Cullerton (D-Chicago) said “This bill is an effort to correct that inequity.”
Unfortunately for the State of Illinois, the “effort to correct that inequity” could cost state and local governments $110 million, according to an estimate from the Illinois Department of Revenue.