At a time when the greed of the one percent is on the minds of Americans, several Illinois corporations are threatening to leave the state if their taxes are raised. GOP legislators have proposed cutting taxes in half for the Chicago Mercantile Exchange (CME), which is threatening to leave the state over their tax bill. Although official tax rates may seem high, there are so many loopholes in the tax laws that most corporations pay only a fraction of the official rate anyway.
Caterpillar’s CEO Doug Oberhelman has stated, “Legislators in Illinois have created an environment that is unfriendly to business and investment,” while his company paid less than one percent in taxes. Many of Illinois’ top corporations pay less than 5% in taxes to the state, possibly helping to explain the state’s continuing debt crisis.
Much of the current problem is that the state of Illinois changed its tax codes to benefit companies like Caterpillar that record their transactions where the sale is made, rather than in the state of Illinois. If Caterpillar sells a tractor in Missouri, the taxes are levied in that state. On the other hand, the CME records all stock transactions as happening in the state of Illinois, no matter which state or nation it occurs in. As a result, the state is being asked to give CME a huge tax break. CME wants the same kinds of tax savings that other Illinois corporations have seen as a result of the sweetheart deals cut by powerbrokers and businessmen, with little or no input from the regular citizens suffering because Illinois can’t pay its bills on time.
Another aspect of the issue is that catering to just the larger corporations is leaving smaller companies to carry more than their share of the burden. Governor Quinn is already saying he will do whatever it takes to keep big employers like CME and Sears in the state, while ignoring the needs of smaller companies. The Small Business Administration says that smaller companies produce an equal share of jobs as the large corporations the state is bending over backward to accommodate. It seems likely that small companies will continue to be overlooked, since no single company has enough clout to either threaten the state or make the kinds of campaign contributions that so often gain access to legislators.