* Proposal would give CME $85 mln in tax relief yearly
* Sears would get $15 mln of relief annually
* Companies have threatened to move to other states
By Andrew Stern
CHICAGO, Nov 29 A second committee of Illinois
legislators approved a proposal that gives $100 million in tax
relief to CME Group and Sears Holdings , which
have threatened to move to other states.
The 12-3 vote by the Illinois Senate Executive Committee
sets the stage for passage of the proposal by the full Senate
Tuesday afternoon, an aide to Senate President John Cullerton
On Monday, a similar proposal passed the Illinois House's
Revenue and Finance Committee. It was expected to be taken up
by the full House.
The House and Senate will then take up each other's bills,
which differ in minor respects, and the one that passes both
houses would be sent to Democratic Governor Pat Quinn to be
signed into law.
CME, Sears and some other employers in Illinois have
threatened to move to other states if they fail to get tax
relief after a recent steep state tax increase.
Critics say giving tax breaks to the companies
disadvantages smaller firms with less leverage and sets a
precedent for other big companies to demand tax breaks.
CME executives say they have talked to officials in Texas,
Florida and Tennessee about potential moves. A Sears spokesman
said the company has received proposals from about a third of
the 50 U.S. states, and the Chicago Tribune has reported that
Sears executives have visited Columbus, Ohio, and Austin,
Cash-strapped Illinois can ill afford a reduction in tax
revenue. The state faces billions of dollars in unpaid bills
and billions more in unfunded pensions, and it is one of
several states grappling with a strained budget.
Illinois in January raised corporate tax rates to 7 percent
from 4.8 percent, and individual rates to 5 percent from 3
percent, to close a chronic budget deficit and begin paying
CME and Sears each employ thousands of people.
CME, which operates the Chicago Mercantile Exchange and the
Chicago Board of Trade, would receive $85 million in annual tax
savings. The bill limits state taxes to income on 27.54 percent
of electronic transactions on local exchanges.
Sears, which owns Sears and Kmart stores, would get a tax
break of $15 million yearly over the next decade as long as it
keeps its headquarters in the Chicago suburb of Hoffman
Estates. The company, which has 6,100 employees in Hoffman
Estates, said it backed the measure.
Under the proposal, all Illinois businesses could claim up
to $100,000 in tax credits from past net operating losses,
helping small firms, and a research and development tax credit
was extended for five years. Individuals would see a bump in
the personal tax exemption, the estate tax exemption would be
raised, and the earned income tax credit for poor taxpayers
One key difference in the Senate version is the earned
income tax credit would rise to 10 percent in 2013, while it
would stay at 7.5 percent in the House version.
The $250 million tax relief package was to be funded by
letting expire an allowance for companies to accelerate
depreciation of capital investments.
Quinn also announced a bipartisan agreement to keep open
seven state healthcare facilities through the fiscal year. The
facilities had been slated for closure.