Updated: Chicago debt downgraded by 3 notches to A-

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    Jun 14, 2011 2:18 AM GMT
    http://www.investors.com/NewsAndAnalysis/Article/575088/201106101902/Will-The-Chicago-Merc-Flee-Illinois-Taxes-.htm

    Will The Chicago Merc Flee Illinois Taxes?

    States: The company that owns Chicago's two largest futures exchanges is thinking about moving operations out of state to flee oppressive business taxes. Worried about climate change? How about the business climate?

    The days when Chicago was the "hog butcher to the world" have long since passed, replaced by its role as a leading financial trading center that is home to the Chicago Mercantile Exchange, also known as the Merc, and the Chicago Board of Trade.

    On Wednesday, Terence Duffy, chairman of CME Group Inc., which owns the two institutions as well as the New York Mercantile Exchange, and Chief Financial Officer James Parisi announced the financial giant is considering moving operations and jobs out of the state in response to massive increases in state taxes.

    Parisi told the company's annual meeting of shareholders that the state legislature's tax hike on corporations from 4.8% to 7% costs CME an extra $50 million a year. Corporations in Illinois also pay 2.5% tax on income, called a personal property replacement tax, which is collected by the state and flows to local governments.

    The two rates taken together come to 9.5%, the third highest corporate tax rate in the nation, according to the Tax Foundation. In February, CME reported a 3% drop in fourth-quarter earnings partly because of expenses it booked related to the tax hike.
  • Webster666

    Posts: 9217

    Jun 14, 2011 2:21 AM GMT
    WHEN YOU REPUBLICANS WERE IN CONTROL OF ALL BRANCHES OF CONGRESS, FOR SIX YEARS, WHY DIDN'T YOU JUST ELIMINATE ALL TAXES, PERIOD ?
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    Jun 14, 2011 2:24 AM GMT
    I see this as a ploy, just as with Caterpillar, Sears Holdings, Jimmy John's, John Deere, etc. as the first step in finding out what tax breaks other states are willing to offer and asking for similar tax breaks + 1 dollar from Illinois. With the very nature of the merc, where are they going to move to? Louisville, Ky? (No offense to anyone that lives there).

    The bigger issue at play are states competing with each other for jobs via bloated tax breaks. For the good of the overall country, it is a negative-sum, no win game.
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    Jun 14, 2011 2:39 AM GMT
    ILmarathonrunner saidI see this as a ploy, just as with Caterpillar, Sears Holdings, Jimmy John's, John Deere, etc. as the first step in finding out what tax breaks other states are willing to offer and asking for similar tax breaks + 1 dollar from Illinois. With the very nature of the merc, where are they going to move to? Louisville, Ky? (No offense to anyone that lives there).

    The bigger issue at play are states competing with each other for jobs via bloated tax breaks. For the good of the overall country, it is a negative-sum, no win game.


    Given that the tax rates are so much higher in Illinois than across state lines, why would other states need to offer tax breaks to begin with? There's nothing zero sum about letting states compete to build the most attractive environment for businesses that want to create jobs.

    The Merc could move most of its operations out - or administrative/control positions out of the state. Any number of states could support them - probably around New York given how much Illinois hiked taxes. They will leave.

    The thing is that these are the high profile firms. There are a lot of smaller firms who will just leave or set up elsewhere with nary a peep. and it's hardly certain that firm specific incentives will be enough - given they tend to be temporary. Illinois has just chosen not to deal with their structural issues but pretend that new taxes can solve their previous spending excesses.
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    Jun 14, 2011 2:46 AM GMT
    riddler78 said
    ILmarathonrunner saidI see this as a ploy, just as with Caterpillar, Sears Holdings, Jimmy John's, John Deere, etc. as the first step in finding out what tax breaks other states are willing to offer and asking for similar tax breaks + 1 dollar from Illinois. With the very nature of the merc, where are they going to move to? Louisville, Ky? (No offense to anyone that lives there).

    The bigger issue at play are states competing with each other for jobs via bloated tax breaks. For the good of the overall country, it is a negative-sum, no win game.


    Given that the tax rates are so much higher in Illinois than across state lines, why would other states need to offer tax breaks to begin with? There's nothing zero sum about letting states compete to build the most attractive environment for businesses that want to create jobs.


    States enacting policies to drive down the cost of labor to create "attractive environments" for business is anti-American. Pitting one group of citizens against another in a race to the bottom is bad for everyone, even the businesses themselves who are too driven by short term profits to realize they're destroying their own markets.
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    Jun 14, 2011 2:52 AM GMT
    Christian73 saidStates enacting policies to drive down the cost of labor to create "attractive environments" for business is anti-American. Pitting one group of citizens against another in a race to the bottom is bad for everyone, even the businesses themselves who are too driven by short term profits to realize they're destroying their own markets.


    Competition is good for everyone - including governments. It's not pitting citizens against each other. It's helping them meet their potential, to build value. You're right - it's not about building short term value - but encouraging firms to build sustainable value - which is why I don't think states that offer short term incentives can be trusted.
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    Nov 12, 2013 2:43 PM GMT
    http://www.moneynews.com/Economy/fitch-chicago-downgrade-rating/2013/11/11/id/535974

    Chicago, the third-most-populous U.S. city, had its credit rating lowered three steps on more than $8 billion of debt by Fitch Ratings, which cited the city’s growing unfunded pension liability.

    Fitch cut the rating on $8 billion of Chicago’s general- obligation bonds to A-minus from AA-minus, the New York-based company said late Friday in a statement. It also took the same action on $500 million of debt backed by the Windy City’s sales taxes.

    It’s the second three-step rating cut for Chicago since July, when Moody’s Investors Service lowered its grade to A3, the fourth-lowest investment-quality category, citing pension burdens and the costs of crime. Mayor Rahm Emanuel, a 53-year-old Democrat, has proposed raising the city’s cigarette sales tax by 75 cents a pack to help close a deficit of $339 million.
  • conservativej...

    Posts: 2465

    Nov 12, 2013 9:39 PM GMT
    It seems to me that Chicago and Illinois are following a pretty predictable pattern. For now, they have simply provided the investor who steps in to feed a liquidity need extra yield on existing debt, with of course an increase in yield on new debt when it is issued. They will follow their pattern until a day of reckoning arrives al la Detroit, then scream like hell that someone else must pay their bills.

    What the individual must do is make sure they are not the one ultimately called to pay that bill. It's not unlike the alcoholic. If you can keep the drunk from killing people while driving, then simply allow them to drink themselves to death. The ill effect tends to manage itself in the long run. icon_eek.gif
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    Nov 13, 2013 1:42 AM GMT
    conservativejock saidIt seems to me that Chicago and Illinois are following a pretty predictable pattern. For now, they have simply provided the investor who steps in to feed a liquidity need extra yield on existing debt, with of course an increase in yield on new debt when it is issued. They will follow their pattern until a day of reckoning arrives al la Detroit, then scream like hell that someone else must pay their bills.

    What the individual must do is make sure they are not the one ultimately called to pay that bill. It's not unlike the alcoholic. If you can keep the drunk from killing people while driving, then simply allow them to drink themselves to death. The ill effect tends to manage itself in the long run. icon_eek.gif


    I am watching NYC and wondering how that will unfold with de Blasio. My suspicion is that it will not end well. That things like this are happening not to mention the ballooning US debt - much of which isn't even on the books reflects rather poorly on Republicans and/or their brand.