Illinois House Approves CME-CBOE, Sears Tax Deal
December 12 2011 - 4:19PM
Dow Jones News
A package of tax breaks to keep Chicago's largest derivatives
exchanges and a major retailer in Illinois won approval Monday in
the Illinois House of Representatives, but only after state
government leaders reconfigured the deal.
The House vote was 81-28, with seven members declining to vote.
The measure received only eight 'yes' votes late last month when
the same chamber overwhelmingly rejected the proposal.
The defeat was largely due to disagreements about broader tax
relief that would aid low-income workers.
To make the bill politically palatable, legislative leaders
agreed to split it in two, separating relief for CME Group Inc.
(CME), CBOE Holdings Inc. (CBOE), and Sears Holdings Corp. (SHLD),
and help for low-income workers through increases in
earned-income-tax credits.
The House passed the earned-income-tax credits portion of the
legislation earlier in the day.
The bills also must win approval in the State Senate, which is
scheduled to meet Tuesday.
Democratic Gov. Pat Quinn favored additional tax credits for
workers, but the plan is a "first-step toward fairness and
promoting economic growth," said Quinn's budget director David
Vaught.
The legislation allows CME and options exchange CBOE to be taxed
on 27.54% of all electronic trades, which make up the vast majority
of the business performed at the exchanges. Currently, the
exchanges pay taxes on 100% of their electronic transactions, even
though many of the buyers and sellers of CME and CBOE trades are
not located in Illinois.
"They're being taxed on all of their trades, and that's not
fair," said Republican House Minority Leader Tom Cross.
The tax breaks would start at the next fiscal year, which begins
July 1.
But Cross warned that other corporations will approach Illinois
for tax breaks almost on a daily basis because of the state's
high-tax environment.
Many Republicans complained Illinois businesses are looking
elsewhere after the legislature in January increased the state's
corporate-tax rate to 7%, from 4.8%.
Testifying at a committee hearing Monday morning, CME Chief
Financial Officer Jamie Parisi said the legislation will
"modernize" tax statutes to account for exchanges' "more global
focus."
CME has market participants in more than 150 countries, Parisi
said.
Sears would pay lower taxes from the renewal of a special taxing
district in the Chicago suburb of Hoffman Estates, which is the
retailer's home.
About 6,000 people work at Sears's Hoffman Estates headquarters.
About 2,000 CME workers are based in Illinois, although Parisi
estimated that 130,000 jobs are tied to the derivatives
industry.
Both companies are mulling offers from other states to leave
Illinois. Indianapolis Mayor Greg Ballard made a personal appeal to
CME executives during a Chicago visit on Dec. 2.
CME has called Chicago its home for all of its 163 years in
business. If CME's board decided to move its headquarters, all that
would stay would be the two trading floors located at the CME-owned
Chicago Board of Trade, CME Chairman Terry Duffy said .
Open-outcry trading at the CBOT pits represents less than 5% of
CME's business, Duffy said during a committee hearing last
month.
-By Howard Packowitz, Dow Jones Newswires; 312-750-4132;
howard.packowitz@dowjones.com
CME (NASDAQ:CME)
Historical Stock Chart
From Jun 2024 to Jul 2024
CME (NASDAQ:CME)
Historical Stock Chart
From Jul 2023 to Jul 2024