Illinois enacts Internet sales tax law

[StrangeSox]

Agreed.

 

Fine, let the states do it individually.

 

Oh, wait, you'll cry over that too.

[southsider2k5]

The Indiana Mercantile Exchange has a nice ring to it...

 

http://chicago.cbslocal.com/2011/06/09/cme...leave-illinois/

 

CHICAGO (CBS) – The parent company of the Chicago Mercantile Exchange and Board of Trade is the latest firm to threaten to move out of Illinois over the corporate income tax increase earlier this year.

 

As WBBM Newsradio 780′s Nancy Harty reports, Terrance Duffy, chairman of the CME Group, said company officials are looking at opportunities elsewhere, but no decision has been made.

 

CME group chief financial officer James Parisi says Illinois’ tax hike in January to 9.5 percent from 7.3 percent cost the company an extra $50 million a year.

 

Duffy tells the Chicago Sun-Times he is upset by the state’s failure to close corporate tax loopholes. He accuses the state of favoring some companies, but leaving others, including CME, to pay the full rate.

 

CME owns the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange. The firm was created after the Mercantile Exchange bought out the Board of Trade for $11.9 billion in 2007.

 

Duffy said CME could retain some operations in Illinois if it relocated.

 

The CME Group is the latest in a slew of companies that have threatened to leave the state over the tax hike.

 

Peoria-based Caterpillar made headlines in March for a letter indicating that it might leave the state, but chief executive officer Doug Oberhelman decided to keep the company in following a meeting with Gov. Pat Quinn.

 

Later, Quinn offered Motorola Mobility $100 million in financial incentives to keep its corporate headquarters in Libertyville.

 

Navistar and Sears, Roebuck & Co., have also reportedly considered moving out of Illinois over the tax hike.

 

Quinn supported a hike in corporate and personal income tax rates this year as a way to shore up the state’s historic budget deficits.

[Balta1701]

Read a great story about a bank, might have been UBS or someone like them, moving their main offices out of NYC a decade ago to somewhere in Connecticut, a few hours away, to avoid NYC City Taxes. This week, they decided to give up and move back to NYC. They couldn't recruit people to work there because people actually find benefits to living in and working in those type of cities.

 

Anyway...if the quality of route 20 when I was driving on it last month is any guide, they'll take a drive to Indiana, come home with a concussion, and realize "F*** this" we're staying in the city. H. Christ.

[Jenksismyhero]

Read a great story about a bank, might have been UBS or someone like them, moving their main offices out of NYC a decade ago to somewhere in Connecticut, a few hours away, to avoid NYC City Taxes. This week, they decided to give up and move back to NYC. They couldn't recruit people to work there because people actually find benefits to living in and working in those type of cities.

 

Anyway...if the quality of route 20 when I was driving on it last month is any guide, they'll take a drive to Indiana, come home with a concussion, and realize "F*** this" we're staying in the city. H. Christ.

 

Remember that 9-10% unemployment thing...

[NorthSideSox72]

Chances of CME moving anything significant out of state are

 

[Jenksismyhero]

And where exactly does this policy leave us here in this great state of Illinois? Essentially "big" companies have the state by the balls - they can merely threaten to leave and they'll be thrown tax breaks left and right. They've managed the storm of the recession, and now get an even bigger break just for being a big employer.

 

Meanwhile, if you're a "small" business in Illinois, you get doubly f***ed. Your business is probably already gone to s*** and then your taxes got increased, so you get to shoulder the brunt of the "historic budget deficit."

 

Makes perfect sense right?

Edited June 9, 2011 by Jenksismybitch

[southsider2k5]

Chances of CME moving anything significant out of state are

 

Just for s***s and giggles, that extra fifty million dollars works out to just under a dollar a share of the outstanding shares.

[NorthSideSox72]

Just for s***s and giggles, that extra fifty million dollars works out to just under a dollar a share of the outstanding shares.

CME is already making a gigantic margin, and the stock price is being hit not by the tax situation, but by the regulatory haze that I have talked about before. Once that settles, and people remember that the listed futures were the least of the problems in the collapse AND the CME is diving big into clearing previously uncleared products... that stock will do quite nicely. I'd rate it a strong buy right now. And the state tax situation won't seem like much.

 

Also, I'm betting money that the state will do something for them after their complaints. CME Group is not only one of Chicago's largest employers, it tends to employ a lot of highly paid people, and its growing a lot. Sears and Cat can't say that.

 

[Balta1701]

Remember that 9-10% unemployment thing...

How does that impact things? NYC is still Wall Street's home, and Wall Street has, um, weathered the storm fairly nicely...(sure, with a small bit of government help, but we don't pay attention to that)

[Jenksismyhero]

How does that impact things? NYC is still Wall Street's home, and Wall Street has, um, weathered the storm fairly nicely...(sure, with a small bit of government help, but we don't pay attention to that)

 

You don't think there are more qualified people looking for work today than a decade ago?

[Balta1701]

You don't think there are more qualified people looking for work today than a decade ago?

Then it should be easier to find people willing to work in Connecticut, not harder.

[southsider2k5]

Then it should be easier to find people willing to work in Connecticut, not harder.

 

I can tell you for a fact there are a ton of places in the financial sector still HQ'd in Connecticut.

[Jenksismyhero]

Sorry, I misread what you wrote. I thought you were saying this all happened a decade ago (the move back).

[Balta1701]

I can tell you for a fact there are a ton of places in the financial sector still HQ'd in Connecticut.

Of course there are. I personally met one of the former heads of VP's of AIG Financial Products who lives up there (yeah, that AIGFP). I found it particularly interesting to watch that trend of tax evacuations start to turn around.

[Texsox]

We can't tax corporations because they will move jobs out of the area. We can't tax higher earning individuals because they are creating jobs. We can't tax low income individuals because they have no money, and we have to cut taxes on the middle class to get elected.

 

 

 

We're f***ed

[NorthSideSox72]

Of course there are. I personally met one of the former heads of VP's of AIG Financial Products who lives up there (yeah, that AIGFP). I found it particularly interesting to watch that trend of tax evacuations start to turn around.

This is similar to the often debated city vs suburbs debate for Chicago area businesses. Some businesses opt for the suburbs because land and taxes are cheaper, this was a big trend in the 70's and 80's here. But that trend reversed a while back because employers started to realize that it was harder to attract talent when their office was somewhere in Lake county or whatever. It limits their effective pool of talent to just those north suburbs for all basic purposes, as opposed to downtown, where all transit lines come to a head.

 

[southsider2k5]

Of course there are. I personally met one of the former heads of VP's of AIG Financial Products who lives up there (yeah, that AIGFP). I found it particularly interesting to watch that trend of tax evacuations start to turn around.

 

I can't really provide much more info because of privilege through work, but suffice to say a firm or two isn't a trend.

[Balta1701]

I can't really provide much more info because of privilege through work, but suffice to say a firm or two isn't a trend.

Can I apply the same standard when only a firm or two winds up actually relocating out of illinois?

[southsider2k5]

Can I apply the same standard when only a firm or two winds up actually relocating out of illinois?

 

Depends on if they stay because they get money or not. The cost of doing business in the state of Illinois is the problem at the center of all of this. The CME's taxes are 9.5% now in Illinois. In Indiana they would be 6.5% now, so they would save even more than the $50 million increase they just saw. If the State of Illinois comes up with a package that saves them a good chunk of that money, then their number one complaint is solved. Why should they move at that point.

[NorthSideSox72]

Depends on if they stay because they get money or not. The cost of doing business in the state of Illinois is the problem at the center of all of this. The CME's taxes are 9.5% now in Illinois. In Indiana they would be 6.5% now, so they would save even more than the $50 million increase they just saw. If the State of Illinois comes up with a package that saves them a good chunk of that money, then their number one complaint is solved. Why should they move at that point.

They won't move either way. CME Group is made up of a whole lot of very skill and knowledge-specific individuals, many of which are not willing to move to Indianapolis, or commute to Gary or the like. The brain drain would hit them real, real hard. This isn't some simple manufacturing business.

 

[bmags]

Depends on if they stay because they get money or not. The cost of doing business in the state of Illinois is the problem at the center of all of this. The CME's taxes are 9.5% now in Illinois. In Indiana they would be 6.5% now, so they would save even more than the $50 million increase they just saw. If the State of Illinois comes up with a package that saves them a good chunk of that money, then their number one complaint is solved. Why should they move at that point.

 

How much would it cost to actually move their company to indianapolis

[NorthSideSox72]

How much would it cost to actually move their company to indianapolis

Direct cost? A decent chunk, not a ton. In terms of human capital? They'd be permanently screwed.

 

[southsider2k5]

They won't move either way. CME Group is made up of a whole lot of very skill and knowledge-specific individuals, many of which are not willing to move to Indianapolis, or commute to Gary or the like. The brain drain would hit them real, real hard. This isn't some simple manufacturing business.

 

Here is a better breakdown of what they are looking at. At the end of the day I am sure that Illinois won't be stupid and will give them a nice break so that they don't move. But don't get the idea that this doesn't happen.

 

http://www.suntimes.com/business/5854347-4...ve-chicago.html

 

It accounts directly for about 2,000 jobs in the Chicago area, but its ripple impact goes much further. Trading firms set up shop here to be near the downtown trading floors, and banks and other institutions add staff to serve that business.

 

Some estimates place the job count from the trading industry here, which includes the Chicago Board Options Exchange, at more than 60,000.

 

Duffy said CME could retain some operations here even if it relocated. He declined to discuss those options, but it’s unlikely CME would move its trading floors in the Board of Trade building at 141 W. Jackson.

 

With its vast communications apparatus, a trading floor operation would be hard to duplicate elsewhere. It’s more likely that CME would consider moving staff and equipment that deal with electronic trading, which constitutes 80 percent of its business.

 

Duffy said he has no timetable for a decision. He also said he has not started face-to-face negotiations with the state.

 

A spokesman for Gov. Pat Quinn said the administration “has an aggressive business agenda and is always open to meeting with business leaders” about their concerns and job creation. The spokesman cited other sources that have praised the state’s business climate, saying, “Illinois’ advantages for business are unparalleled.” The corporate tax hike was approved during the Legislature’s lame-duck session along with higher income taxes for individuals.

 

The move elicited protests from other major employers in the state, notably including Caterpillar Inc.

 

CME has a data center in Aurora and a back office operation at 550 W. Washington. It also keeps a corporate headquarters at 20 S. Wacker, a two-tower complex where it used to have trading floors.

 

The threat to leave town seems to contradict another CME initiative to have trading firms place equipment inside the company’s data center in Aurora. Called co-location, the service promises firms that the proximity will shave milliseconds off trade processing time, which is seen as an advantage in hyper-fast markets.

 

But company executives said any extra costs firms would face for moving that equipment would quickly be repaid by state eager to get CME. The company is believed to be looking at New York, New Jersey, Texas and Indiana.

 

Jack Sandner, retired chairman of CME and a member of its board, said the threat is not idle. “The message is we’ll move if we have to,” he said.

[bmags]

Direct cost? A decent chunk, not a ton. In terms of human capital? They'd be permanently screwed.

 

I'm actually interested in the direct cost. They'd at the very least offer a pretty decent relo package. But yeah, no f***in way i'd ever move to indianapolis unless someone tripled my pay.

[NorthSideSox72]

Here is a better breakdown of what they are looking at. At the end of the day I am sure that Illinois won't be stupid and will give them a nice break so that they don't move. But don't get the idea that this doesn't happen.

 

http://www.suntimes.com/business/5854347-4...ve-chicago.html

LOL, yeah, because the electronic trading tech gurus are really going to want to move to Indy when there are lots of jobs for them in Chicago. Not gonna happen, unless you are suggesting the whole derivatives world is going to up and move out, which is also a non-starter.

 

Though I agree that the state will probably throw some money at them just to make sure.