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Indiana making hay from Illinois' tax mayhem

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Greg Andrews

The Chicago Mercantile Exchange is a quintessentially Chicago institution. It doesn’t seem fathomable that it would have its headquarters in, say, Florida or Indiana.

Yet officials insist they’re seriously considering moving out of state in the wake of a 30-percent corporate-income-tax hike enacted in January they say will cost the company $50 million this year.

“We don’t want to leave Chicago,” Terrence Duffy, executive chairman of exchange owner CME Group said over the summer, but “we have to do what’s right for our shareholders.”

Such are the woes Illinois Gov. Pat Quinn is facing in the wake of the state’s raising the corporate tax rate from 7.3 percent to 9.5 percent. The move angered firms large and small—and spawned relocation threats by some of the state’s most iconic businesses. Hoffman Estates-based Sears Holding Corp., for instance, also is entertaining proposals from other states.

News reports around the country suggest CME’s leading suitors are Indiana, Tennessee, Texas and Florida. According to a source cited by Crain’s Chicago Business last month, Indiana has dangled a $150 million annual tax break to lure the headquarters into the Hoosier State.

The $150 million figure is a “complete falsehood,” Gov. Mitch Daniels later told a Hammond radio station. IEDC officials wouldn’t comment on CME.

Few expect CME to slip out of Chicago, since allowing that to happen would be politically devastating for the governor and other state and city leaders. And somebehindthenews-factbox.gif of the rhetoric from CME and other corporate heavyweights, observers say, is just posturing aimed at winning incentives or legislative changes that would make it more attractive to stay put.

Still, many Illinois firms are serious about moving or expanding out of state—and Indiana economic development officials are racing to capitalize.

Within weeks of passage of the tax increase, Indiana had erected “Illinoyed by higher taxes?” billboards near the Illinois border. State officials began courting disgruntled companies, playing up rankings that list Indiana as having the best tax climate in the Midwest and as being a low-cost place to do business.

So far this year, 16 Illinois businesses have said they plan to consolidate or locate operations in Indiana, creating a projected 1,564 jobs in the state, according to the Indiana Economic Development Corp. That includes four consolidations or relocations in central Indiana that are projected to yield as many as 424 jobs.

Among firms bolting for Indiana is Blue Island, Ill.-based Modern Forge Cos. The maker of RV and aerospace parts plans to hire 240 workers over three years in Merrillville. “I don’t think it takes a genius to figure out the business climate in Indiana is better than Illinois, and that’s been coming for a long time,” company official Patrick Thompson said in August.

The reality is more nuanced, said Tim Monger, a former executive director of the Indiana Department of Commerce who now is senior vice president of Cassidy Turley’s Indianapolis-based Location Advisory and Incentives Services Division.

Indiana has low Worker’s Compensation insurance costs, a plus for manufacturers, Monger said. It also bolstered its attractiveness by reducing the corporate income tax in the last legislative session. On the other hand, property taxes are high.

“You have to look at it from a number of different perspectives—distribution, manufacturing, back office, headquarters,” he said. “Each of those types of operations would be impacted differently.”

He added that “Chicago is still very much a magnet for companies. It sort of defies the odds.”

In an story this month, Crain’s Chicago Business concluded Illinois actually has a better business climate than neighboring states. It found Illinois fared better than Indiana in key factors important to employers, such as the percentage of residents with a college degree (31 percent for Illinois vs. 23 percent for Indiana).

Indiana officials scoff, noting that Chief Executive magazine in May ranked Illinois 48th on a list of best states to do business.•

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  1. Those of you yelling to deport them all should at least understand that the law allows minors (if not from a bordering country) to argue for asylum. If you don't like the law, you can petition Congress to change it. But you can't blindly scream that they all need to be deported now, unless you want your government to just decide which laws to follow and which to ignore.

  2. 52,000 children in a country with a population of nearly 300 million is decimal dust or a nano-amount of people that can be easily absorbed. In addition, the flow of children from central American countries is decreasing. BL - the country can easily absorb these children while at the same time trying to discourage more children from coming. There is tension between economic concerns and the values of Judeo-Christian believers. But, I cannot see how the economic argument can stand up against the values of the believers, which most people in this country espouse (but perhaps don't practice). The Governor, who is an alleged religious man and a family man, seems to favor the economic argument; I do not see how his position is tenable under the circumstances. Yes, this is a complicated situation made worse by politics but....these are helpless children without parents and many want to simply "ship" them back to who knows where. Where are our Hoosier hearts? I thought the term Hoosier was synonymous with hospitable.

  3. Illegal aliens. Not undocumented workers (too young anyway). I note that this article never uses the word illegal and calls them immigrants. Being married to a naturalized citizen, these people are criminals and need to be deported as soon as humanly possible. The border needs to be closed NOW.

  4. Send them back NOW.

  5. deport now

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