I know, I know—I should have already weighed in on the gazillion-dollar tax break Christmas present the state gave the Chicago Mercantile Exchange last month.
But I was preoccupied with holiday parties, Bulls games, old movies, giving my dog a bath—anything to dull the pain of what our elected officials were up to. Like the aforementioned gazillion-dollar tax break for CME.
To refresh your memory, that's the one where CME, the international options-trading behemoth, decided it was paying too much in state corporate income taxes. And its top officials let it be known that if the state didn't lower the tax tab right away, the Merc would move to Indiana. Maybe call itself the Munster Mercantile Exchange.
Governor Pat Quinn, house speaker Michael Madigan and senate president John Cullerton responded by pushing through a bill that effectively lowers what CME pays in income taxes by an estimated $125 million in the next two years and untold hundreds of millions after that.
After which Mayor Emanuel sent out a press release hailing the tax break as "reform."
Once again: I think it's a good idea not to use that word in relation to anything any politician ever does in Illinois.
So . . . the state that's already tens of billions of dollars in debt now has to find new and creative ways to make up for the hundreds of millions of tax dollars it won't be getting from CME. Probably by asking retired cops, firefighters, and teachers to live on less. Call it pension reform. Because as everyone knows, it's not really financial reform unless you're making old retirees pick up the tab.
As you can see, there's so much bad about this deal it's hard to know where to start. So I'll start with 6 percent, which would be the percentage of the state's total corporate income tax yield that CME supposedly paid in 2010.
I understand they paid 6 percent of the total because I read it in the papers—Terrence Duffy, CME's executive chairman, made the original claim in an interview with Bloomberg News. I also heard it offered up as evidence by legislators who claimed that it's just not fair for one corporation to pay so much of the state total. Even if that corporation made $951 million in 2010.
Just to make sure about that 6 percent, I called the state Department of Revenue and wound up talking to Susan Hofer, a public information officer. Our conversation went a little like this:
Me: So how much did CME pay in corporate income taxes in 2010?
Hofer: I can't tell you because the amount anyone—individual or corporation—pays in income taxes is privileged information.
Me: So you might say that the 6 percent figure is a wholly owned subsidiary of CME?
Hofer: [Sound resembling a chuckle.]
Well, at least I got a laugh out of this deal, which is more than most taxpayers can say.
Dutiful reporter that I am, I then checked in with CME. I wound up getting an e-mail from a public information officer named Michael Shore, who wrote: "Info about taxes paid by CME group can be found in our 10-k."
That would be the annual 10-k disclosure report all publicly traded companies must file with the Securities and Exchange Commission.
So I clicked on the accompanying link and found myself confronting a daunting 122-page document—every line of which was riveting. On page 89, I found that CME claimed to have paid $148.9 million in state taxes, of which $76.1 million was deferred.
It also said that the state tax rate was 5.8 percent, even though the state's tax rate was 4.8 in 2010. Plus, the document didn't indicate how much of the $148.9 million went to New York, where CME also has operations. Nor did it explain what the deferred $76.1 million revealed about how much the firm actually paid in 2010.
All in all, the SEC document raises more questions than it answers about how much CME paid in Illinois corporate income taxes in 2010.
I e-mailed Shore for clarification, but alas, he did not respond.