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Illinois Senate considering CME Group tax breaks

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Under pressure to act quickly, the Illinois Senate is scheduled to consider tax relief for some big-name companies threatening to leave the state, part of a $330 million package sweetened by aid for smaller businesses and struggling families.

CME Group Inc. is considering moving its headquarters to Indianapolis or possibly Carmel, a move that could bring 1,700 or more high-paying jobs to central Indiana.

CME, which operates the Chicago Mercantile Exchange, and Sears Holdings Corp. have been urging lawmakers to take action before the end of the year. They, along with the trading company CBOE Holding Inc., have threatened to move out of state unless Illinois helps cut their tax bills.

The Senate is scheduled to meet at noon Tuesday, a day after the tax package passed the Illinois House. The Senate has approved similar legislation in the past, so the latest version is likely to get the chamber's stamp of approval.

Some House members were dubious about responding to threats from businesses, and protesters in the House gallery on Monday unfurled a banner saying "Stop Corporate Extortion." Their timing was off, though: They displayed the message while lawmakers were debating tax breaks for individuals.

House approval marked a dramatic turn-around. Just two weeks ago, a similar package failed 8-99, with some lawmakers demanding more relief for poor families and others opposing any help for the poor.

This time, backers split the proposal into separate bills, one dealing with corporate taxes and the other with personal taxes. Each bill then passed because the two groups of opponents were voting against different bills. The business measure passed 81-28. Tax relief for families passed 67-49.

Democratic Gov. Pat Quinn called the package "a win for the people of Illinois" because it would help business while also offering some relief to families.

The financial exchanges had appealed for lower taxes by arguing that it's no longer appropriate for the state to tax every one of their transactions as if they take place on a Chicago trading floor. Most are now handled electronically and do not involve buyers or sellers in Illinois.

Under the proposal headed for the Senate, the exchanges would be taxed on just 27.54 percent of their revenue, a somewhat arbitrary figure legislators said should be re-examined later. The change should save the companies about $85 million a year.

Sears would be granted an extension of an economic development credit it has been getting for years. It would save $15 million a year for the next 10 years. A break on local taxes for its headquarters in the Chicago suburbs would also be renewed. Sears called the House vote a "major step" and said it hoped the Senate would follow suit.

Lawmakers also approved $2 million in tax breaks to encourage production of live theater in Chicago and $350,000 a year in credits for Champion Laboratories Inc., a southern Illinois company that is moving to the Chicago suburbs.

For businesses in general, the package includes a research-and-development credit, a more generous method of writing off losses, extension of a tax break for ethanol and an expansion of what property is exempt from estate taxes. The cost of these measures would be roughly $120 million a year.

Critics fear the corporate tax breaks will take scarce dollars away from state services.

The Service Employees International Union asked why CME needs tax relief when it is making huge amounts of money—$316 million in the most recent quarter alone.

The tax breaks for families would cost the state about $110 million a year and come in two forms.

One is an increase in the personal income tax exemption. It now stands at $2,000, which means for every person in a household $2,000 is exempt from state taxes. The new legislation would raise that to $2,050 and require it to rise each year with the rate of inflation.

The other tax break is an increase in the state's earned-income tax credit, which helps the working poor hang on to more of their money. The credit is now 5 percent of the federal tax credit. The House action would raise that to 10 percent.

House Majority Leader Barbara Flynn Currie, D-Chicago, said the increase means a single mother making minimum wage and raising two children would see her $400 state tax bill cut to $259. That money goes back into the economy and helps Illinois businesses, she said.

"This is not money people are going to sit on. It's money they are going to spend," Currie said.
 

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  • Really?
    We have a cyberbullying law? I didn't realize that Indiana is so "progressive" (read sarcasm).
  • Stop trolling our websites.
    Steve i am actually about done with you. Stop trolling the forums on the Indianapolis side.
    You can get in Legal Trouble cause Indiana has laws against Cyberbullying.
    So this the last time i am going to say this stop following me around and posting.
  • Yep
    Today, CME's Chief Financial Officer testified before the IL House's Revenue committee. He indicated that, should the tax break legislation pass, CME would stay in IL "for decades" more. Translation: They REALLY don't want to move to Indiana or any other state. If IL did not pass the bill, they'd basically be pushing CME to move.
  • Money they don't have
    Odd that a state with an $8 BILLION budget deficit would be able to pass this measure. Now I know where Barry got his schooling on how $$$ works.

    http://www.reuters.com/article/2011/06/02/us-illinois-budget-comptroller-idUSTRE7516SR20110602

    If CME is the prudent business they say they are, they will make the move to Indiana. Why operate in a state that won't be able to pay its utility bills next year?
  • Illinois is Broke
    Illinois Treasurer Dan Rutherford is pulling no punches when it comes to sounding the alarm about Illinois' financial health. He calls Illinois the "most bankrupt state in the nation."

    Illinois Comptroller Judy Baar Topinka says lawmakers proposed spending needs a REAL revenue source. She state's "One thing is clear: the 'spend now, pay later' culture of state government must change – and the time is now."

    Illinois Policy Institute's Ted Dabrowsk calls for a simple solution of repealing the tax increases that started this crisis considering the proposed "solution" of corporate and individual tax breaks will actually cost the state much more than they will get from the original tax increases that motivated CME and Sears relocation threats.

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