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A bake sale for the Merc

Despite nearly $1 billion in profits last year, the Chicago Mercantile Exchange is crying about the recent state tax hike — and community groups across the city feel their pain.

They want to help.  Really.

Community activists and teachers will be among those hosting a bake sale for CME Group Monday, June 13 at 10 a.m. at CME headquarters, 20 S. Wacker.  It’s sponsored by Grassroots Collaborative.

It seems clear that CME’s recent threat to move its headquarters is a publicity stunt.  The company’s revenues (and tax liabilities) are generated at its trading floors and at its huge, brand-new data center in Aurora, which would be much harder to move than its corporate offices.

Furthermore, three of the four states CME is said to be considering – Indiana, New York, and New Jersey—have higher corporate tax rates than Illinois, even after the recent tax hike here.*

(The fourth state is Texas, where a Tea Party legislature and a radically pro-business agenda of tax cuts and deregulation have transformed a widely-touted “economic miracle” – based largely on an explosion of minimum-wage jobs – into an economic basket case.)

It’s more likely, as the Tribune reports, that CME wants Governor Quinn to offer a tax break package, as he has to more than 130 companies in his two years in office – with deals this year alone totaling $230 million.  You can call it corporate welfare if you like; Greg Hinz calls it “piracy,” and David Greising points out that it’s not always a good investment.

It wouldn’t seem like a few million in tax breaks would make a huge difference to CME.  The company had $3 billion in revenue and $951 million in profit last year, with both figures up 15 percent over the previous year.

Perhaps they’re just feeling unloved, in which case Grassroots Collaborative’s action will certainly help.

Shareholders at the corporation’s annual meeting last week weren’t so concerned with taxes, David Roeder reports:  they’re more worried about skyrocketing executive compensation, while stock prices and dividend payouts lag.

They might consider joining a much larger action on Tuesday, when thousands of Chicagoans are expected to protest the Chicagoland CFO Executive Summit (4:30 p.m., Tuesday, June 14) at the Hyatt Regency, 151 E. Wacker.

It will be preceded by three smaller rallies at 3:45 – for education at Cityfront Plaza, jobs at Daley Plaza, and housing at the Thompson Center – each of which will march to the Hyatt.

According to Stand Up Chicago, the 80 corporations and banks represented at the summit made $200 billion in profits last year.  “Rather than investing in job creation, they spent the money on themselves, paying their CEOs $857 million and their CFOs $327 million.

“How many homes could be saved from foreclosure with that kind of money?  How many schools could stay open?  How many jobs could be created?”

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* Business groups like to include Illinois’s 2.5-percent personal property replacement tax in the coporate income tax, boosting the total over 9 percent.  But that tax was instituted when local taxing bodies in Illinois were barred from taxing corporate equipment and personal property in 1998, as localities in many other states still do.

Want to fix the state’s budget deficit?

While the legislature slashes human services and education, a new analysis shows that taxing the state’s wealthiest residents at the rate now borne by its poorest residents would eliminate state and local deficits, including pension shortfalls — and avoid the human and economic costs of drastic cuts.

The bottom 20 percent of Illinois households pays 13 percent of their income in combined income, property, and sales taxes, according to a new study by United for a Fair Economy and the Center for Tax and Budget Accountability.  That’s more than double the burden for the top 20 percent, which pays 6.2 percent – and over three times the 4.1 percent share paid by the top 1 percent.

Flip that regressive structure – rearrange it so the top earners pay 13 percent – and you would have an additional $32.5 billion each year, according to the study.  Taxes for the bottom 60 percent would stay the same or decrease.

“It’s just a matter of being more reasonable about how we tax people,” said Ron Baiman of CTBA.

“Trying to raise adequate revenue through a regressive tax structure — where a greater percent of income is demanded of the poor than the well-off — is like trying to squeeze water from a stone,” said Karen Kraut, coordinator of state tax policy at United for a Fair Economy and co-author of the report.

The study looks at all 50 states and finds that the “upside-down,” regressive nature of their tax structures “is a major reason that states are grappling with such significant budget shortfalls.”

Not only are revenues down because of overreliance on the low- and middle-income households that are hurt most by a downturn, but the tremendous income growth at top incomes in recent decades has not been tapped.

Illinois has one of the most regressive tax structures in the nation, with its poorest residents paying a higher share of income in taxes than those in 47 other states.

To achieve a more progressive structure, states need to move toward a graduated income tax and reduce reliance on regressive sales and property taxes, according to the report.

In the state budget just adopted by the General Assembly, Baiman is angry that a proposal to decouple the state from a federal business depreciation bonus wasn’t included.

That would have brought in an additional $600 million in revenue, he said; 27 other states have decoupled from the accelerated depreciation deduction.

“It’s absolutely inexcusable,” he said.  “Why would you forego $600 million in revenue at a time like this?”

Groups say JP Morgan Chase is soaking the state

Community groups from across the city will rally at JP Morgan Chase and petition elected officials tomorrow demanding that the bank pay its fair share to solve the state’s fiscal crisis.

The action at JPMorgan Chase, 10 S. Dearborn (Thursday, May 12, 3:45 p.m.) is one of six across the state targeting the bank.  Organizers say the bank should renegotiate loan terms which are costing the state hundreds of millions of dollars and do more to stop foreclosures.

In “toxic rate swaps,” JPMorgan Chase and other banks set fixed interest rates for financing state bond deals, said Jennifer Ritter of Lakeview Action Council. But since then “interest rates have plummeted because banks crashed the economy,” she said.

These “rotten interest rate deals” cost the state of Illinois $88 million a year – and the city of Chicago $74 million – in inflated rates, according to Make Wall Street Pay/Illinois, which is sponsoring tomorrow’s action. The group estimates the Illinois taxpayers will pay an additional $800 million for the deals through 2012.

Protesters will march to the State of Illinois building and delegations will deliver letters to Governor Quinn, Senate President Cullerton and House Speaker Madigan calling on them to renegotiate the rate deals.

They also want state leaders to support decoupling federal accelerated capital depreciation tax credits from the state income tax – which would recover $1 billion over two years, Ritter said – and to pass legislation holding banks accountable for the costs of foreclosure, which will cost Illinois taxpayers $7.4 billion through 2012, she said.

“It’s about corporate accountability, and it’s also about starting to look at the state’s budget crisis as a revenue crisis instead of just trying to cut our way out,” said Ritter.

The actions mark the launch of the Make Wall Street Pay/Illinois coalition. One reason they’re targetting JPMorgan Chase is that many groups will be joining protests at the bank’s shareholders meeting next Tuesday in Columbus, Ohio.

There the New Bottom Line campaign will demand that Morgan Chase pay its fair share of taxes and do more to modify troubled mortgages and lend to small businesses.

Where the money is: a lesson from CTU’s founders

This week Dirt Diggers Digest highlights the legacy of Margaret Haley and Catherine Goggin, two Chicago teachers who founded a federation in the 1890s which grew into the first teachers union in the nation and ultimately the Chicago Teachers Union.

When the board of education used a purported fiscal crisis to demand reductions in teachers’ salaries, Haley and Goggins “launched an intensive investigation of tax dodging by some of the largest corporations in the city, finding that property tax underpayments amounted to some $4 million a year.” That was a lot of money in 1890.

Today in Wisconsin, Governor Scott Walker is demanding that teachers and other public employees surrender not just pay and benefits, but their right to collective bargaining.  This would allow Walker and other officials to dictate terms of employment.

He says this is needed to meet a budget gap projected at $3.6 billion over the next few years.  But his recent enactment of $140 million in business tax breaks give credence to charges that his real agenda is destroying public employee unions.

This turns out to be a pattern around the nation — in states with Republican governors, as Michael Winship points out at Huffington Post. In Michigan, Rick Snyder has demanded $180 million in concessions from public workers and a billion dollars in cuts to schools, universities and local governments; he’s also pushing $1.8 billion in corporate tax cuts.

In Arizona, Jan Brewer passed $535 billion in corporate tax cuts, and now plans to kick a quarter of a million people off Medicaid.  In Florida Rick Scott is cutting essential services to pay for $4 billion in corporate and property tax cuts.

Closing deficits is not these folks’ top priority.

Last week we cited HuffPost’s report that two-thirds of corporations in Wisconsin pay no taxes, and the corporate share of tax revenue has fallen in half since 1981, according to the state’s revenue bureau.

Addressing the rhetoric of “shared sacrifice” coming from Walker, Real News Network’s Paul Jay points out that Wisconsin’s billionaires have seen their wealth continue to grow while everyone else suffers.  He says that restoring the state’s estate tax – which has brought in nothing for two years – to 2008 levels would raise $158 million a year.  Restoring it to its 2001 level, and throwing in a million-dollar exemption, would solve the state’s budget problems neatly.

Corporate tax avoidance is the target of US Uncut, a new group modeled on a movement in Great Britain.  They protested this weekend at Bank of America, which paid zero taxes [in 2009] and made over $10 billion in profits last year.

According to the Guardian, a GAO report found that 83 of the top 100 publicly-traded corporations in the U.S. use corporate tax havens to minimize their tax bills.  US Uncut says that big corporations dodge up to $100 billion in US taxes every year.

That’s a lot of money, even in 2011.  By coincidence, it’s the same amount that Republicans in Congress promised to cut from the federal budget.

In Chicago, CPS faces huge deficits, more school closings are promised, and state legislation backed by the mayor and his successor would take away teachers’ collective bargaining rights.  Meanwhile a new analysis shows that half of TIF subsidies have gone to the city’s most profitable corporations, with much of the rest going to developers of high-cost housing.  Expect that program to come under increasing scrutiny.

Disability advocates: budget cuts are costly

Budget cuts proposed by Governor Quinn will devastate services allowing people with disabilities to live in community-based settings and in their own homes, forcing many out of work and into nursing homes — thus costing the state more than the cuts will save, according to Access Living.

People with all types of disabilities will rally against the cuts (prior to an Illinois Senate Human Services Committee hearing), Thursday, February 24, 9 a.m. at the State of Illinois building at Dearborn and Randolph.

Cuts to home care will raise state costs

Cuts in the state budget to programs that help people with disabilities live in their own homes will end up forcing many into insitutions – and costing the state more money than it would have spent on community-based care.

That’s the contention of a broad coalition of organizations representing people with physical, developmental, and psychiatric disabilities, who will rally against budget cuts tomorrow (Monday, July 19) at 11:30 a.m. at the State of Illinois building, Randolph and Dearborn.

“The disability community understands that budget cuts impact almost everyone and every service in Illinois, but most of the cuts to disability services don’t make sense,” said Gary Arnold of Access Living.  He said most of the cuts are to community-based services, “which cost less money than institutional services.

“If the community services are cut, more people will be forced into institutions, costing the state more money.”

Advocates have identified over $100 million in cuts to community services for people with developmental disabilities or mental health issues, Arnold said.   He said the cost of institutional care is dramatically higher than for community-based care.

“We think a rebalancing of the budget would give people more choice and be more cost-effective,” he said.

Tax Day: Where’s Walmart?

Union workers and community groups plan a Tax Day rally to highlight tax loopholes for Walmart tomorrow (Thursday, April 15) at 5 p.m. at the U.S. Post Office at Canal and Harrison.

Walmart employees on Medicaid rolls in Illinois cost the state over $2 million a year, said Kristen Ryan of UFCW Local 881.  Walmart is the largest company on the state’s list of employers with 50 or more employees receiving Medicaid.

In 2006 the Chicago Tribune reported that 1,132 Walmart employees received Medicaid in Illinois, costing the state $2.5 million a year.

Only half of Walmart’s employees qualify for or can afford the health insurance offered by the company; critics say high premiums and high deductibles make it unaffordable for many employees.  And in addition to long waiting periods to qualify, work schedules with reduced hours often prevent Walmart employees from qualifying.

In 2004 a report by staff of  the U.S. House Committee on Education (pdf) estimated that a single Walmart store with 200 employees costs taxpayers over $400,000 a year in federal public assistance programs.

Ryan also cited large sales and property tax rebates associated with Walmart developments.  As Newstips reported in 2007 and 2008, Illinois leads the nation by a wide margin in public subsidies for Walmart, with Good Jobs First identifying $153 million in state and local subsidies — including $41 million in sales tax rebates at 11 Illinois Walmart stores between 1998 and 2008.

“With the state’s budget crisis, that money could be put to good use for actual services for Illinois taxpayers,” said Ryan.

State cuts will increase homelessness

Homeless service providers are struggling to keep their doors open, and 1,300 people seeking shelter were turned away during January 2010 due to state budget cuts, according to a new survey by four groups working to end homelessness.

Failure to pass comprehensive tax reform will mean more families losing their homes, according to the study.

State funding for homeless programs has been reduced by over $10 million a year, or about 23 percent, and agencies dedicated to homeless prevention and providing emergency shelter, transitional housing, homeless youth housing, and permanent supportive housing are borrowing heavily to offset delays in state funds.

Ed Shurna of the Chicago Coalition for the Homeless welcomed Governor Quinn’s commitment to  raise revenue but said Quinn’s proposal to raise the income tax by 1 percent is “totally inadeqaute” and “an invitation to put off real solutions yet again.”

Along with CCH, the Chicago Alliance to End Homelessness, Housing Action Illinois, and the Supportive Housing Providers Association – all members of the Responsible Budget Coalition — helped prepare the survey.



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