In a Wall Street Journal opinion article last week, Chairman Duffy stated that CME Group is exploring options to relocate and save money in light of the recent corporate tax hike in Illinois. The article can be viewed here: Review and Outlook: Escape From Illinois, Cont. (See text below.)
If you have any questions, contact the Governor’s Press Office at 850-488-5394.
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June 16, 2011
Mr. Terrence Duffy
Chicago Mercantile Exchange (CME) Group
20 S. Wacker Drive
Chicago, IL 60606
Dear Chairman Duffy:
I read with great interest yesterday your comments in the Wall Street Journal opinion article, “Review & Outlook: Escape From Illinois, Cont.,” regarding the recent tax hikes in Illinois and its impact on CME Group and other companies. I wanted to let you know that like Illinois, Florida has begun a transformation of its own – to not only be the best place during your cold winters, but to also be the best business environment in the country.
Since becoming Governor in January, my top priority has been making Florida the number one state to start, grow or relocate a business. Lowering taxes, streamlining government and eliminating red tape are just a few of the ways we are attracting businesses and creating new private sector jobs.
Of all these steps, tax relief is the most important. I started this year by implementing a tax reduction plan which targets almost half of Florida’s businesses. Meanwhile, companies in Illinois are facing a tax rate of 9.5 percent, four percentage points higher than Florida. I will not rest until the business tax is completely phased out in our state so that both Florida and companies like CME Group can thrive.
As a businessman myself, I know the frustration of spending significant revenue just to pay your company’s state taxes. Imagine the growth your company could achieve if you could reinvest those additional state taxes to hire more employees and expand operations.
Florida was recently named number three on Chief Executive Magazine’s list of best states to do business. Illinois ranked nearly last in the nation at number 48. Florida is also a right-to-work and no-income-tax state, another positive for your employees who would enjoy having more money in their pockets. But more than just a better business climate, we have a trained workforce that is ready to provide talent your company can benefit from, and we are focused on providing the best educated workforce in the country.
In addition, Florida is the fishing and golf capital of the world. We also have the best beaches, world class theme parks and 160 state parks. Our state is the best place to live, work and play.
As CME Group continues to explore cost-saving options, I ask that you consider doing business in Florida, where I’m confident you will get the greatest return on your investment, the best workforce, a convenient location and a great place to live.
As the leader of economic development for the State of Florida, I invite you and your team to call me directly to discuss in more detail the specific benefits that CME Group can gain by expanding in Florida. You may contact me personally at 850-488-5603.
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Escape From Illinois, Cont.
Now the Chicago Merc wants relief.
June 15, 2011, Wall Street Journal
The line of businesses looking for tax relief in Illinois keeps growing, with the latest plea coming from the owner of the iconic Chicago Mercantile Exchange and Chicago Board of Trade. CME Group Executive Chairman Terrence Duffy told a shareholders meeting last week that Illinois Governor Pat Quinn’s 30% hike in the corporate tax rate enacted in January will cost the company $50 million this year. “We don’t want to leave Chicago,” Mr. Duffy said, but “we have to do what’s right for our shareholders.” A spokesman confirmed that the company is exploring all options to save money.
We reported last week that dozens of major Illinois firms—from Caterpillar to Motorola to Sears—are in open rebellion in the wake of Springfield’s $6 billion revenue grab and new 9.5% corporate rate, fourth highest in the U.S. Mr. Quinn has already carved out some $230 million in special tax breaks this year to save companies from his own tax policies and keep these firms from fleeing.
Our guess is that Mr. Duffy’s statement is also an attempt to bargain for better tax treatment, and it’s hard to blame him. The Chicago Tribune reports that CME pays 8.9% of its income in state tax, while most businesses pay well below 7% and many pay no tax at all thanks to rich deductions. Mr. Quinn says he’s having an “ongoing conversation” with CME, and we’ll bet a February pork belly contract that he’ll deliver the bacon.
The Merc and Board of Trade are Chicago’s equivalent of Wall Street, engaging in trillions worth of trades each year and directly employing some 2,000 employees. At least 60,000 more Chicago-land workers have jobs linked to the trading centers. Losing the companies would be a huge psychological blow to the city and state, in addition to the hardship for individuals.
Meanwhile, nearby Indiana, which has vastly improved its business climate under Governor Mitch Daniels, has come up with a new ad campaign to lure jobs across the border: “Illinnoyed by Higher Taxes? SolutionIndiana.com.” Mr. Quinn may have to pay more than he ever imagined to counteract the results of his antibusiness policies.
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