The executive chairman of CME Group, the parent company of the Chicago Mercantile Exchange and the Chicago Board of Trade, has threatened to take the company's headquarters outside of Chicago, a gesture that has some in Illinois wringing their hands -- and others relatively unconcerned.
The Chicago Tribune reports that chairman Terrence Duffy is considering the move as a result of Illinois's recently passed increase on corporate income tax, which came along with the personal income tax hike in December of last year.
It's "part of a rebellion that has been brewing since the state temporarily raised its corporate income tax in January," the Tribune reports.
Illinois governor Pat Quinn is moving quickly to appease the rebels, according to Crain's Chicago Business. Gov. Quinn has invited CME Group to discuss the company's corporate tax rate with him, and is apparently open to the possibility of lowering the rate to keep the company in town.
This isn't the first time a corporation has threatened to leave town as a result of the new tax rates. Earlier in the year, Caterpillar made a lot of noise about considering a departure, only to decide to stick around after some cajoling by Quinn. The governor also kowtowed to demands by Sears and Motorola for additional financial incentives to keep their headquarters in the state.
None of those major companies left the state.
With those previous cases in mind, some observers wonder if CME isn't bluffing to try to earn some concessions from Quinn as well. "You would think that with the big and, as it turns out, almost totally fake uproar about Caterpillar leaving Illinois after the state raised its income tax rates that reporters might be a bit more circumspect the next time a corporate titan hinted at longing for greener pastures," Rich Miller at the Capitol Fax blog wrote. "You'd be wrong."
Indeed, it's not entirely clear that the threat even holds water. Moving corporate headquarters out of the state wouldn't avoid state income taxes, as they are levied on all business done within state lines. Instead, they'd have to move all of their trading operations outside of the state, an ordeal that would incur tremendous expense, especially given CME's recent investment in a massive new data center in Aurora, Illinois.
But the group may still win concessions from politicians. The Chicago News Cooperative explains why:
The Chicago Mercantile Exchange — whose parent company, CME Group Inc., has threatened to leave Illinois — ranks among the most generous political donors to the city and state leaders now trying to convince CME to remain here.
State campaign-finance disclosure reports show that Gov. Pat Quinn and Mayor Rahm Emanuel recently received large donations to their election efforts from the Chicago Mercantile Exchange.
The Merc's $200,000 check to Rahm Emanuel was the largest single donation he received in his entire campaign.
Emanuel, a former member of the board of the CME, told Crain's that he was “confident the company will remain in Chicago." He didn't clarify if that was before or after state and local incentives, or how much those incentives might be.
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