The city announced that CME Group, Inc. financial exchange elected to turn down $15 million in Tax Increment Financing, or TIF, money.
The announcement came the same day that the Mayor’s office announced TIF reform and two other companies – CNA Group and Bank of America – also returned TIF money. Moreover, CME Group's announcement comes after Stand Up! Chicago delivered a golden toilet to the company’s downtown headquarters last week, partly in protest of their tax incentives.
Additionally, a widely cited report on the Illinois budget was released yesterday, calling for a new state policy on tax incentives for businesses.
These developments could suggest a turning point in how the city and state dole out business tax incentives – in the form of tax breaks and tax credits on the state level, and TIF subsidies on the city level.
Gov. Pat Quinn and the Illinois state legislature spent 2011 raising the corporate income tax by 66 percent and then assuring major Illinois companies like Motorola Mobility that they would effectively be exempt through tax incentives. Otherwise, Quinn and lawmakers warned, these companies could leave Illinois.
Giving special tax breaks to corporations was best exemplified by the state legislature’s actions this fall. Lawmakers kept scheduling special veto sessions – three, in all – in order to secure a tax break for CME Group as well as Sears Holding Corp. and the Chicago Board Options Exchange.
The prolonged, two-month process of figuring out a tax break for these companies, triggered Occupy Chicago protests and the formation of coalitions like Make Wall Street Pay.
It’s not just advocates who are upset. In a report on Illinois budget problems that received much press, the Chicago Civic Federation (hardly an anti-corporate organization, as a Progress Illinois op-ed today from AFSCME Local 31 public employees union argues) chastises Illinois for lacking a comprehensive policy on economic development incentives.
The Civic Federation calls for a transparent economic development policy so companies do not keep threatening to leave the state.
At the city level, Mayor Rahm Emanuel’s office has taken initial steps to create a more transparent business tax incentive process through TIF reforms. The mayor announced yesterday more audits of TIF projects and a comprehensive TIF database.
Also, the city’s public-private economic development arm World Business Chicago announced a new ethics policy in December, where WBC would no longer recommend the city give tax breaks to certain companies. The city’s Inspector General scolded WBC last summer for the TIF money it recommended for CME Group – as CME chairman Terry Duffy sits on World Business Chicago’s board.
Possibly the biggest city level movement is growing awareness, and anger, of the complex world of corporate tax breaks. Stand Up! Chicago staged a protest last Tuesday outside CME’s downtown headquarters and Stand Up! Chicago policy analyst Elizabeth Parisian wrote a Chicago Tribune op-ed Thursday criticizing CME’s state tax break and city TIF money.
Stand Up! Chicago welcomed the news of CME turning down the TIF money.
"We're pleased that CME has listened to the people of Chicago and recognized that TIF money belongs to our schools and communities, not billion-dollar corporations," Parisian said in a statement.