UPDATE: Illinois Governor Signs Deal To Keep CME, CBOE, Sears In State
December 16 2011 - 6:37PM
Dow Jones News
CME Group Inc. (CME) announced late Friday that it will remain
in Illinois after the state's governor signed into law a series of
tax relief measures.
Gov. Pat Quinn signed the controversial measure adopted earlier
this week by both chambers of the Illinois General Assembly.
The bill provides tax relief to CME, options exchange CBOE
Holdings Inc. (CBOE) and Sears Holdings Corp. (SHLD).
Illinois government will tax the exchanges on only 27.54% of all
electronic trades, which is the dominant method of buying and
selling derivatives contracts. Currently, the exchanges pay taxes
on all electronic transactions, even though exchange officials
claim most of the trades don't originate in Illinois.
Tax breaks will start for the next fiscal year, which begins
July 1.
In a prepared statement, CME Chairman Terry Duffy said, "we are
pleased that Illinois Governor Pat Quinn and the State Legislature
have addressed the inequitable distribution of corporate taxes
currently levied on CME Group."
"This necessary adjustment to the Illinois corporate tax laws
will put CME Group on more equal footing with other Illinois
companies and other global exchanges," Duffy said. "We will
continue to call the great State of Illinois and City of Chicago
the risk management capital of the world," he added.
CBOE and Sears indicated they too would stay in Illinois in
statements released after the bill won final legislative approval
on Tuesday, and again after Quinn signed the bill on Friday.
The legislation "ensures a more equitable tax structure for
Chicago's exchanges," said CBOE chief executive William
Brodsky.
Lawmakers "recognized the economic value of Chicago's exchanges
to the city and state and lent bipartisan support," Brodsky also
said.
Sears, a department store chain that also owns Kmart and Lands
End, will benefit by paying lower taxes from the renewal of a
special taxing district for its headquarters in the Chicago suburb
of Hoffman Estates.
"We applaud the governor for his leadership and recognition of
Sears' contributions to our state - thousands of jobs and hundreds
of millions of tax dollars," the retailer said in a statement
released Friday.
Illinois businesses have been sharply critical of the state
legislature's January vote to raise the corporate tax rate to 7%,
from 4.8%.
Several states, including Florida and Indiana, were quick to
court CME, offering their locations as a new home base.
Indianapolis Mayor Greg Ballard visited with top CME executives
in Chicago on Dec. 2.
"CME [executives] made the best decision for their company
that's possible," Marc Lotter, a spokesman for Mayor Ballard said
Friday.
"We take advantage of every opportunity we can to speak to
companies and talk about the benefits of Indianapolis."
Ballard's counterpart, Chicago Mayor Rahm Emmanuel, praised
Quinn and legislators for protecting thousands of jobs and working
to "keep the CME Group where it belongs, here in the city."
-By Howard Packowitz and Jacob Bunge, Dow Jones Newswires;
312-750-4132; howard.packowitz@dowjones.com
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