Photo: AP Photo/Charles Rex Arbogast
As is too often typical in cities, states and nations controlled by progressives and Democrats, Illinois has spent itself into a deep ditch.As is also typical, rather than take the cure and cut that spending, this past January they chose instead to go back to the goose that lays the golden eggs and raise taxes once again.
As a result, unemployment immediately started to climb. No surprise then that two more of the state’s biggest geese are considering leaving.
The parent company of the Chicago Board Options Exchange has been talking with other states about moving its headquarters, threatening the city’s status as the “derivatives capital of the world.”
The CME, previously known as the Chicago Mercantile Exchange is also looking for an exit after the January tax increase increased their tax liabilities by 25%.
“We’ve had a series of meetings with people in this state and outside this state,” said Bill Brodsky, chairman and chief executive of CBOE. “The bottom line is that we don’t want to leave Illinois, but the structure that exists as it relates to exchanges is virtually punitive.”
The Chicago derivatives exchange is the core of Chicago’s financial services industry, all of which has been impacted by these latest tax increases. It is estimated that 120,000 people are employed in the trading business in Chicago, an industry that has expanded to fill the gaps left by the erosion of manufacturing there.
“Our goal is to find a way that will remove the punitive aspects that will allow us not to move operations out,” Brodsky said. “Hopefully we will come to a solution, but if not we have many other alternatives.” Brodsky described the state’s tax structure as “discriminatory and punitive” when compared with what is paid by public companies in other industries.
In January, the state raised the corporate tax rate to 7% from 4.8%, and had the higher rate been in effect last year, CBOE would have paid about $17.1 million in state taxes instead of $13.7 million.
In a meaningless release by a spokesman, Illinois Governor Pat Quinn announced that, “The governor’s door is always open to business leaders to continue discussing other ways we can improve Illinois’ business climate to create more jobs and expand the economy,” she said.
Unfortunately for Illinoisans, cutting spending and reducing taxes just doesn’t seem to be part of “the Chicago way”.
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