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  • Taxed Too Much: Board of Trade Parent Company May Leave Chicago

    It’s not every day that a company with roots as deep as the CME Group, Inc.—the parent company of the famous Chicago Mercantile Exchange and Board of Trade—would consider fleeing its home state, seeking better a better economic climate a thousand miles away.

    But that’s just what’s happening, and taxes are the reason the company is looking for a new home after founding the Chicago Board of Trade in 1848. The Chicago Tribune reports:

    CME Group Inc. is evaluating whether to move some operations to other states from Chicago to reduce its taxes, but it has not decided on an exact timeline, CEO Craig Donohue said Thursday.

    “Our tax situation is untenable,” Donohue told Reuters, noting that CME is taxed more heavily than any of its global competitors. The company is talking with at least three states—Texas, Florida and Tennessee—about relocating some of its business to take advantage of lower tax rates there, Donohue said.

    But for its roots in Chicago, CME Group’s decision isn’t surprising. In January, Illinois Governor Pat Quinn (D) signed into law a whopping 67 percent income tax increase, together with a 50 percent increase in the corporate tax rate from 4.8 percent to 7 percent. His goal was to make up for a $15 billion budget deficit that was said to be the worst in the nation.

    Policies like Quinn’s are leaving some states behind while other more competitive states are surging ahead. A new “Rich States, Poor States” study by the American Legislative Exchange Council (ALEC) digs into why some states are prospering while others (like Illinois) are failing, ranking each state based on its economic performance (as determined by 1999–2009 absolute domestic migration, personal income per capita, and non-farm payroll employment).

    Sadly for Illinois, it ranks third to last, behind Michigan and Ohio. Illinois saw 652,205 residents leave the state, a drop in employment of 7 percent, and personal income per capita growth of only 34.8 percent. The researchers at ALEC place the blame squarely on the state’s tax burden, and they say the state’s future isn’t bright:

    Illinois is, undoubtedly, in tough financial shape today. The state has a higher default risk than Iceland and is currently approaching that of Iraq. Furthermore…the state’s pension system is in full financial meltdown.

    To be sure, the Land of Lincoln faced rough financial straits before the current tax hike, but the low rate income tax was one of the state’s last remaining vestiges of pro-growth tax policy. Now that the lid has been blown off the income tax, we expect Illinois to gradually drift toward the dangerous category of California and New York.

    Meanwhile, other states are enjoying economic growth—particularly Texas, Florida, and Tennessee, where CME Group says it might be headed. ALEC ranks those states among those with the best economic outlook ratings in 2011. Compared to Illinois, none of those three states has a personal income tax, all have a lower corporate tax rate, and all are right-to-work states.

    With policies like those, it’s no wonder CME Group is looking for a new place to do business.

    Posted in Ongoing Priorities [slideshow_deploy]

    3 Responses to Taxed Too Much: Board of Trade Parent Company May Leave Chicago

    1. Paul says:

      This tax money finds its way to the Democrat Mayor, all who service him , and most of all to the Unions to elect more Democrats who give them raises.

      Unions are denying the ordinary citizen the right to vote with this circle of corruption by leeching off the treasuries and electing corruptive politicians that have sold their very souls.

      Unions must be outlawed from the public sector and managed in the private sector as they destroy businesses and ironically the jobs of their very own members who are forced to give dues. A down year bankrupts the company or their forced to go to another State or even overseas.

    2. Nancy Webster says:

      I hope the CME Group is serious, and not just threatening to bring about concessions from the state.
      Memphis, TN

    3. Denny says:

      "Southern Hospitality" is more than a phrase. Come on down and enjoy a state which appreciates new businesses and treats them with respect.

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