Monday, June 13, 2011

If You Tax Something, You Get Less of It

From an IBD editorial, "Will the Chicago Merc Flee Illinois Taxes?"

"The company that owns Chicago's two largest futures exchanges is thinking about moving operations out of state to flee oppressive business taxes. 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. In February, CME reported a 3% drop in fourth-quarter earnings partly because of expenses it booked related to the tax hike.

The ways of Washington, D.C., and Illinois stand in stark contrast with Texas, a state with no income tax, where workers decide for themselves whether to join a union, and that doesn't impose harsh regulatory burdens on businesses or their employees. It recently added to its business-friendly climate with loser-pays tort reform legislation.

Texas eschews while Illinois embraces the Obama model of more government, more unions, more central planning, higher taxes. So it's not surprising that while Obama's Illinois flounders, Texas has created 37% of all new net jobs since June 2009.

Illinois is losing a congressional seat as businesses and people leave. Texas is adding four seats as that state prospers. Build it and they will come; tax it and they will leave."

HT: Pete Friedlander

17 Comments:

At 6/13/2011 9:24 PM, Blogger DL said...

The CME should get the hell out of there.

 
At 6/13/2011 9:31 PM, Blogger NC said...

Suggest a mandatory tax on liberalism.

 
At 6/13/2011 10:16 PM, Blogger Buddy R Pacifico said...

"Corporations in Illinois also pay 2.5% tax on income, called a personal property replacement tax,..."

OMG! Tax creation has endless possibilities in Illinois.

 
At 6/13/2011 10:27 PM, Blogger Rufus II said...

Let's see how Texas handles their $27 Billion Shortfall for 2012 - 2013, first. See how that tax situation looks in, say, 2014.

 
At 6/13/2011 10:38 PM, Blogger Rufus II said...

Also, I would consider that the Median Income for a family of 3 in Illinois is $68,782.00 and in Tx it is $60,900.00

 
At 6/13/2011 11:54 PM, Blogger Stephen said...

Doesn't this same argument apply to "subsidize it and they will come"?

 
At 6/14/2011 2:08 AM, Blogger PeakTrader said...

Rufus, after adjustments to the cost of living, Illinois median family income is more like $30,000 (or half as much as Texas).

So, a worker in Illinois has to work harder to maintain his standard of living.

Here's an "equality" scenerio for you:

While someone has to work harder and harder to maintain his standard of living (because of regulations, taxes, fees, etc.), his next door neighbor doesn't work and receives welfare.

The welfare recipient has loud parties keeping the worker awake. He doesn't care if he keeps the worker awake, because he can sleep anytime.

When prices rise, e.g. because of regulations, the welfare recipient gets a cost of living raise, while the worker has to work harder.

 
At 6/14/2011 3:15 AM, Blogger PeakTrader said...

"Build it and they will come; tax it and they will leave."

"Meaningful probability" of a China hard landing: Roubini
Jun 13, 2011

"I was recently in Shanghai and I took their high-speed train to Hangzhou," he said, referring to the new Maglev line that has cut traveling time between the two cities to less than an hour from four hours previously.

"The brand new high-speed train is half-empty and the brand new station is three-quarters empty. Parallel to that train line, there is a also a new highway that looked three-quarters empty. Next to the train station is also the new local airport of Shanghai and you can fly to Hangzhou," he said.

"There is no rationale for a country at that level of economic development to have not just duplication but triplication of those infrastructure projects."

 
At 6/14/2011 3:37 AM, Blogger juandos said...

"Let's see how Texas handles their $27 Billion Shortfall for 2012 - 2013, first"...

The Republican and Perry have an easy solution to the cut the habits of the Democrats and R.I.N.O.s: Texas faces budget shortfall; GOP likely to ‘slash and burn’

 
At 6/14/2011 5:27 AM, Blogger bob wright said...

The national democrat party is practicing the old bait-and-switch.

BAIT: They say the federal government should tax millionaires and billionaires.

SWITCH: Then they tax small business owners making as little as $200k.

 
At 6/14/2011 8:08 AM, Blogger morganovich said...

rufus-

sure. texas ought to imitate the high tax strategies of places like new york, california, and Massachusetts whose finances are in such great shape.

oh, wait...

 
At 6/14/2011 9:22 AM, Blogger juandos said...

Yeah, those high taxes are really paying off in Chicago...

From the Chicago Sun Times: Source: Flash mobs on lakefront a threat to Chicago economy

The tsunami of new flash mob violence on the lakefront is a threat to tourism, business, Chicago’s economy — and the infancy of Mayor Rahm Emanuel’s promising new administration.

“There was trouble on the lakefront before — but nothing like this,” a top cop source said. “It’s like the bad economy has forced the gangs to enter into rich man’s land. If the city loses the lakefront to the flash mobs, there goes the economy.”

 
At 6/14/2011 9:58 AM, Blogger Paul said...

Juandos,

"Flash mobs" in Chicago? Sounds like something right out of Alinsky's playbook. How ironic Rahm has to deal with them.

 
At 6/14/2011 10:18 AM, Blogger juandos said...

"Sounds like something right out of Alinsky's playbook. How ironic Rahm has to deal with them"...

It had me chuckling at tiny dancer's expense also...

 
At 6/14/2011 12:49 PM, Blogger Mike said...

Rufus,
Not that it's all that much better, but the TX budget shortfall is a little misleading. Texas is sitting on about 10b in the 'rainy day fund'.

 
At 6/14/2011 1:28 PM, Blogger $9,000,000,000 Write Off said...

Rufus- Don't compare median income, compare after-tax income. I bet Texans enjoy at least 10% increase by that measure. And a better basketball team.

 
At 6/17/2011 9:57 PM, Blogger VangelV said...

The CME should leave for a much lower tax jurisdiction like Nevada or Texas. It will send a loud message to the looters and eventually even the idiot voters are going to figure it out.

 

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