Emanuel opposes transaction tax on LaSalle Street traders
BY FRAN SPIELMAN City Hall Reporter May 7, 2014 4:19PM
Traders at the Chicago Mercantile Exchange could decide to take their business elsewhere if the city or state levied a tax on every fiancial transaction, Mayor Rahm Emanuel said Wednesday. | Sun-Times File Photo
Updated: May 7, 2014 4:22PM
Mayor Rahm Emanuel on Wednesday shot down a tax on LaSalle Street exchanges championed by his political nemesis, Chicago Teachers Union President Karen Lewis, as a solution to the teacher pension crisis.
Lewis told the Chicago Sun-Times editorial board this week that a transaction tax on sellers and buyers of futures, future options and securities option contracts traded by the Chicago Mercantile Exchange and Chicago Board Options Exchange could produce a $12 billion-a-year windfall for the state and “make heroes” out of the wealthy men and women who work on LaSalle Street.
Emanuel strongly disagrees. He believes the transaction tax now prohibited by state law would be more likely to turn LaSalle Street into a ghost town. Some financial transaction taxes are also banned by federal law.
A Chicago tax would also be the first of its kind in the country, according to City Hall.
“Years ago, people referred to LaSalle Street because it was a financial center. Chicago had a lot of banks that were Chicago-based. There’s only one left. They’re all gone,” the mayor said.
“As it relates to the futures and options industry, that’s a place where Chicago is still economically a dominant player — and there’s more competition,” particularly if a transaction tax is tacked on.
Even if you “put aside” the economic value and jobs tied to the two exchanges, there would be huge legislative hurdles to overcome before a transaction tax could be implemented, the mayor said.
“You’d have to get both Springfield and Washington to agree,” he said.
“My goal — as I’ve proven with the three other areas of pension reform — is to get an agreement and work through the issues so we can see that security. I don’t think the way we should go is actually to, in my view, do things where we take anything away from our kids to pay a pension. I think we can accomplish both.”
Emanuel is still waiting for Gov. Pat Quinn to sign a bill that sets the stage for a $250 million property tax increase to save the Municipal Employees and Laborers pension funds by increasing employee contributions by 29 percent and reducing employee benefits.
Although Quinn said “no can do” to the property tax, Emanuel has said he’s standing pat with his “balanced, measured and responsible” plan because Moody’s, the Wall Street rating agency that has dropped Chicago’s bond rating four notches in eight months, is demanding a “reliable” source of revenue.
The mayor has said it’s “not my priority” to go back to the property tax to save police and fire pension fund that are closer to the brink than the two funds that the bill on Quinn’s desk is designed to save.
But, he hasn’t ruled that out, either.
What he has ruled out — pointedly and specifically — is a transaction tax, a city income tax increase, and a commercial lease tax like the one championed by Mayor Harold Washington during the mid-1980’s. A Circuit Court judge overturned the six percent lease tax in 1986. The city appealed that decision, but the City Council repealed the tax before the city’s appeal was heard.
The mayor has also nixed the idea of using the jackpot of revenue from a Chicago casino to solve the pension crisis.
“I don’t think you should go to the roulette table with somebody’s retirement check. I’m not gonna do that,” the mayor said last month.
“How long has it been laying out there?... A lot of the credit agencies want something that’s reliable that they count on. I’m trying to stop the city from going to a place that I don’t think it can if we…do the morally responsible thing to ensure that every workers, every retiree gets a pension.”