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* My weekly syndicated newspaper column…
From Illinois law: “No unit of local government shall levy any tax on stock, commodity or options transactions.”
That statute has long been targeted for elimination by the Chicago Teachers Union and its allies. The CTU reliably shuns any proposal to increase property taxes across the board, instead pushing often-times “magical” solutions as alternatives. It’s one way the union has maintained its popularity among Chicago voters.
And new Mayor Brandon Johnson, who spent much of his career working for the CTU, made it clear during his inaugural address that he will eschew property tax increases, lumping them in with onerous fines and fees.
“We have a structural deficit,” Johnson told his audience. “And we have to invest in people. And we have to do that without breaking the backs of working people with fines, fees and property taxes.”
During the campaign, Johnson proposed a 1%-2% “Big Banks Securities and Speculation Tax” that would raise $100 million. So, naturally, there’s worry he will try to use his considerable contacts in the General Assembly and CTU’s clout to persuade Gov. J.B. Pritzker to reverse his position on allowing Chicago to impose a transaction tax and ease the city’s structural deficit.
When he was asked last month about the transaction tax, Pritzker said, “Obviously, what we all want is a thriving financial services economy in the state and the city. I have not stood for a transaction tax, because I think it would be easy for those companies’ servers to move out of the state.”
The financial services industry employs thousands of Illinoisans. And one of the leaders of that industry left Chicago in a huff last year. Citadel CEO Ken Griffin abruptly announced his move to Florida after shutting down funding for his preferred Republican gubernatorial candidate, Richard Irvin. Griffin and Pritzker have exchanged verbal jabs ever since then, and Pritzker has repeatedly full-on attacked Griffin’s Florida Gov. Ron DeSantis.
It’s not a stretch to believe Griffin would love to see more Illinois-based companies relocate to Miami. Crain’s Chicago Business, citing “multiple industry sources,” recently reported that investment firm Guggenheim Partners, which has strong Chicago ties, “is on the verge of deciding to move its headquarters to Miami, the Florida city to which Citadel recently decamped.”
And lots of heads turned last week when Bloomberg reported that CME Group CEO Terry Duffy indicated the company could leave Chicago. CME has already sold all of its real estate in the city and the state, Duffy said.
“In our leases, we have a language in there that says if there’s something that’s ill-conceived from the city or the state, that our leases are null and void,” Duffy said on a Bloomberg podcast. “We’re in a very strong position. If we had to leave, we could leave.”
Duffy did make it clear that “we like Chicago,” saying he wants to be “part of the solution, not a part of the problem.” Also, if you listen to the podcast, Duffy made a point to say he realized that campaign rhetoric often changes when people assume office and have to govern.
And Johnson’s own campaign website claims: “We should raise revenues from activities that won’t leave and cost us jobs.”
While Duffy has strong, lifelong ties to Chicago, he is clearly not happy with how the city has been run. Earlier this month, Bloomberg reported that Duffy said: “Three o’clock in the afternoon, my wife got carjacked right in the city of Chicago, and it’s absolutely insane what’s going on here.”
Duffy said he was also upset with the response he received from then-Mayor Lori Lightfoot about how the homicide rate was falling. “I said, ‘Don’t go there. Please don’t go there.’ One is too many.”
I would assume Duffy has been inundated with offers to move his company elsewhere since the progressive Johnson’s election. Company headquarter locations are very often subject to the whims of the CEO.
Duffy said during his most recent interview he hadn’t yet talked with the new mayor. “I’m hopeful that he reaches out, I don’t care if it’s me or whoever, and talks about these things.”
So, I reached out to the two legislative leaders to see where they stood on allowing home rule units like Chicago impose a tax on electronic transactions.
Spokespersons for both Senate President Don Harmon and House Speaker Chris Welch said their bosses opposed the idea.
This thing is off the table.
…Adding… The Chicago news media freakout over a proposal by a couple of fringe groups continues unabated in Crain’s Chicago Business…
When pressed for insight on the mayor’s own attitude toward these proposals, a senior adviser told Crain’s, “if we were for these ideas, we would have said it.” And yet, given many opportunities to express opposition to these measures, the adviser said only: “Everybody should have a right to put their ideas into the public square.”
That’s not exactly comforting. Nor is the pushback from some observers who have been quick to argue these are merely fringe ideas that would be dead on arrival in Springfield, where many of these measures would have to be blessed before they could be implemented. Messaging matters — especially at a time like this, when investor and employer faith in Chicago as a great place to do business is faltering. If the mayor truly isn’t considering things like a city income tax, a wealth tax, a financial transactions tax or any of the other ideas contained in this report, he ought to say so, loudly and unequivocally.
Oh for crying out loud…
“We put out a plan that we had to [argue about internally] a hundred different times. It was about $800 million. This is $12 billion. So it has nothing to do with what we’re trying to do,” Johnson’s senior adviser Jason Lee told the Sun-Times.
The final amount was “based on our kind of sober analysis of what might be feasible. … Their employee head tax is proposed to raise $100 million a year. Our head tax was proposed to raise $20 million a year. … They raise $2 billion off the income tax alone. We didn’t have an income tax in our plan. We didn’t think that was the right thing to do. They have a wealth tax. We don’t have a wealth tax.”
Chicago had four years of a mayor saying everything “loudly and unequivocally,” and she still flip-flopped on a regular basis after hemming herself in.
posted by Rich Miller
Monday, May 22, 23 @ 8:39 am
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Great read. Thanks, Rich.
To this post,
There’s a continual cycle of “undoable” items that people either talk about or groups/organizations have on agendas. Time after time there are these wants that leaders have no appetite for, the politics are impossible, even the path(s) are more impossible than the want.
The best mantra to making policy into law is doing the doable.
With any rule there are exemptions, proving the rule, but those lifts are not *this* lift.
It’s tiring, no less tiring than “end pensions, cut pensions” or any of your favorite policy impossibilities.
You need allies not fear useless rhetoric, so stop with the pushing of needless angst, even if it’s to stir up your own allies on a thing they need not fear.
There’s enough policy fights to what is possible, the idea of stirring a pot or rustling up angst for their own sake never helps the governing.
This is dead. It’s out happening, “fetch” will happen before this idea… so stop making “fetch” happen… and this discussion too.
Comment by Oswego Willy Monday, May 22, 23 @ 9:02 am
The transaction tax is the most unlikely and difficult of the CTU/ Mayor Johnson agenda because of the number of steps it takes to get done.
1) Congress would have to approve
2) Illinois state law would have to change
3) Chicago City Council would have to approve
4) CME would have to agree to stay in Chicago
The CME is not in the real estate business anymore (with trading next to each other). Virtually all of their transactions are done from the internet. There have been high level serious talks about moving to Texas when transaction tax first started. Anyway, the most important CME customers are located on Park Avenue in Manhattan. So, CME may wind up their to be close to their big customers anyway.
Comment by Steve Monday, May 22, 23 @ 9:10 am
Johnson wasn’t my first choice. However, the things I disagreed with Johnson the most on, I was confident he would never be able to implement either because of not enough votes on the council OR because of state law. This is one of the examples.
Comment by Homebody Monday, May 22, 23 @ 9:14 am
Property taxes can fund a city when the city brings in more per square mile than it needs to spend in maintenance. How to do that? Allow more density. The city (and other cities in IL) has massive liability in maintenance of roads, bridges, sewers, and funding police over a huge area. That sprawl is expensive and when each square mile has few tenants, high property taxes per unit is the result. The more tenants per square mile, the less the burden on each unit. See “Strong Towns”. This is by no means a panacea, but should be included in every discussion of property taxes across the state.
Comment by Incandenza Monday, May 22, 23 @ 9:34 am
When will Chicago voters wisen up against the CTU’s pie-in-the-sky proposals? This isn’t a knock against BJ per se, but unrealistic proposals that will never happen are bad politics that lead to bad governance which in turn hurt the every day working people of Chicago.
It’s far more likely Mayor Johnson will preside over the largest property tax increases in the city’s history than pass an income tax or a financial transactions tax.
Comment by Hot Taeks Monday, May 22, 23 @ 9:39 am
===unrealistic proposals that will never happen are bad politics that lead to bad governance which in turn hurt the every day working people===
This is ONLY true if the policy is forced and loggerheads lead to that bad governing.
See: Rauner, Bruce
You can yap and talk and do whatever, stir up your base, anger your foes, both are terrible, but doing the doable in the end, or just stopping the needless yapping and doing the doable is how good governing happens.
Comment by Oswego Willy Monday, May 22, 23 @ 9:45 am
The problem with undoable solutions like a transaction tax, is that they delude us into thinking that we can avoid addressing the real problem which is the inadequacy of property taxes in the City.
Comment by Pundent Monday, May 22, 23 @ 9:56 am
==When will Chicago voters wisen up against the CTU’s pie-in-the-sky proposals?==
I’m not sure that they haven’t, it’s just that their other choice was a Republican.
Comment by Arsenal Monday, May 22, 23 @ 10:02 am
A more accurate census would help (a little bit). Some federal programs distribute money to local governments based on how many people live there.
A special census could add in people missed in the last census by the feds, as well as new arrivals.
Comment by DuPage Monday, May 22, 23 @ 10:10 am
“So, CME may wind up their to be close to their big customers anyway”
Giving Johnson a break on his campaign-promised financial services tax, or his lack of engagement with CME is so short-sighted. CME the world’s leading derivatives marketplace has been in Chicago since 1898, according to PRNewswire they just hit a daily volume record in 2023 of over 66,250,862 contracts traded. They have a huge impact on the Chicago economy – in a dated but post-2012 CME sale of some Chicago properties they still “In 2016, Duffy said CME Group employed 1,800 Illinoisans directly and supported another 135,000 jobs. Duffy said CME pays almost $50 million in corporate taxes annually, making it one of the top five corporate taxpayers in Illinois.”
CME is not just any other company they are unique and if we lost them - it would be a real hit to the local economy and a huge reputational loss to the “City that works”. Despite the political prediction that a Chicago local financial service tax is DOA, signaling matters to CME a company that can easily relocate. Johnson’s teams need to not just ignore his campaign rhetoric but get to work on reaching out to CME to ensure that they stay.
https://nypost.com/2023/05/20/chicagos-new-mayor-is-bad-for-business/
Comment by Donnie Elgin Monday, May 22, 23 @ 10:11 am
“In our leases, we have a language in there that says if there’s something that’s ill-conceived from the city or the state, that our leases are null and void,”
Boy, that’s almost insuring they leaving. S/
Comment by Bruce( no not him) Monday, May 22, 23 @ 10:11 am
As long as the table is being cleared how about taking the following off the table
employee head tax
Real estate transfer tax
jet fuel tax
highest in the nation hotel tax that is still not able to pay principal on Soldier Field
Comment by Lucky Pierre Monday, May 22, 23 @ 10:36 am
===As long as the table is being cleared…===
What exactly are you babbling about besides helping the Bears with a bailout.
You purposely supported EVERY Rauner roadblock and the state not having a budget.
You cheered the state not having a budget, cheered the pain.
The Bears can pay $300 million over 10 years to help with the bonds, or build the whole project on their own… or sell that property. No one is stopping them
Comment by Oswego Willy Monday, May 22, 23 @ 10:46 am
Dear - Donnie Elgin -
I think this whole column and advice is for you, lol
Comment by Oswego Willy Monday, May 22, 23 @ 10:47 am
On the other hand, Florida and Texas are doing what they can to make their states places many people would prefer not to live. Disney employees strongly objected to a planned move from California to Florida and the company cancelled the move even though there were some strong tax incentives. (Yes, I know there are other factors.)
Because their anti-woke, anti-trans, anti-women, anti-immigrant, anti-intellectual, etc. policies continue to move in that direction, businesses will need to consider whether their employees and potential employees will be comfortable moving into such places with their families.
A transaction tax is likely to push some important employers away from the city; so, taking it off the table is a good idea. That said, finding a revenue source to improve city services (safety, public transportation, infrastructure, etc) is necessary. It would behoove the city’s administration to explore creative financing solutions with the suburbs whose residents rely on the amenities (jobs, education, and leisure) of a large city.
Comment by Pot calling kettle Monday, May 22, 23 @ 10:48 am
“I think this whole column and advice is for you”
I read it in its entirety and with great interest - my comments are what is known as a reaction.
Comment by Donnie Elgin Monday, May 22, 23 @ 10:50 am
==You purposely supported EVERY Rauner roadblock and the state not having a budget.==
The Governor cannot unilaterally cause an impasse. An impasse is, definitionally, a gap between two sides.
It was more important to the General Assembly to hurt people than it was to try out the ideas that a duly elected Governor ran on. History shows that this was a good idea for the General Assembly’s political goals. But it already happened, it’s done, and we should not pretend that it was caused only by one side.
Comment by Garfield Ridge Guy Monday, May 22, 23 @ 10:51 am
===The Governor cannot unilaterally===
… and yet, Rauner DID. Purposely. The Owl bragged on it.
“I’m frustrated too but taking steps to reform Illinois is more important than a short term budget stalemate”
Keep up.
Comment by Oswego Willy Monday, May 22, 23 @ 10:53 am
===we should not pretend that it was caused only by one side.===
That’s adorable.
Doing the doable is getting 60/71 and 30/36
Did you not read this column too? lol
Comment by Oswego Willy Monday, May 22, 23 @ 10:54 am
==When will Chicago voters wisen up against the CTU’s pie-in-the-sky proposals?==
I’m not sure that they haven’t, it’s just that their other choice was a Republican.
Oh no, how horrible.a Repub ..iknow abortion..oh wait its legal here…next
Comment by Red headed step child Monday, May 22, 23 @ 10:55 am
===what is known as a reaction.===
… lacking comprehension it appears.
Citing the NYPost with a take on things that Rich addresses… your reaction lacks understanding the lesson
Comment by Oswego Willy Monday, May 22, 23 @ 10:56 am
==Oh no, how horrible.a Repub ..iknow abortion..oh wait its legal here…next==
It was also legal in many other states until…a republican. Electing republicans has consequences. Folks can’t just dismiss the issue because nothing is settled law any more.
Comment by Travel Guy Monday, May 22, 23 @ 11:27 am
Holding an entire state or country hostage with impossible or totally inappropriate demands is not an impasse. It’s sabotage. It’s what Rauner and his party did, and what Republicans are doing now with the federal debt limit.
Johnson and his supporters have some big history lessons right in front of them, to absolutely not emulate. Do the doable (h/t OW). Don’t go down the dangerous and destructive path of trying to force the impossible. One great policy idea or ideology is twice as bad if it can’t be done, so to speak.
Comment by Grandson of Man Monday, May 22, 23 @ 11:49 am
- Pundent - Monday, May 22, 23 @ 9:56 am:
===The problem with undoable solutions like a transaction tax, is that they delude us into thinking that we can avoid addressing the real problem which is the inadequacy of property taxes in the City.===
You are correct about low property taxes.
Cook County has low, low taxes compared to the collar counties. A few years ago, one of my friends lived in Elgin, in Kane County. He discovered identical houses 1 block away in Cook County paid much lower property taxes, about two-thirds as much. Same schools, same police dept., same fire department, same everything except what county they were in.
Comment by DuPage Monday, May 22, 23 @ 11:54 am
If I recall, CPS could solve many of their issues if they paid the same rate we pay out in 308.
Comment by OneMan Monday, May 22, 23 @ 12:33 pm