Illinois Governor J.B. Pritzker said he would veto any legislation to impose a financial transaction tax that could harm Chicago’s storied exchanges and cause them to leave the state.
“Let me be clear, there is no financial transactions tax on the table, period,” the Democratic governor said in an interview with Bloomberg News. “There will not be support. I would veto it.”
Pritzker’s comments follow months of speculation over how Chicago Mayor Brandon Johnson plans to raise revenue to tackle the city’s embattled finances. They also represent the billionaire governor’s strongest words of opposition to the levy, after he expressed dissent to the proposal following Johnson’s election.
Joshua Lott/Photographer: Joshua Lott/Getty
The third-largest U.S. city is facing a budget gap of more than $500 million, with the shortfall projected to increase in the years ahead. Johnson, a progressive Democrat who took office in May, proposed a slew of taxes during his campaign, including a $1 or $2 levy per securities trading contract that would help him raise $100 million.
But executives from Chicago’s largest exchanges and trading firms have already warned they may be forced to consider their options if the levy puts them at a disadvantage against peers in other states.
Terry Duffy, the chief executive officer of CME Group Inc., said he has liquidated every piece of real estate, and that the exchange — which has called Chicago home for more than a century — would leave if it had to.
“Will the CME still stand for Chicago in five years time? Nobody knows,” Duffy said in a separate interview. “There’s no reason for us to want to leave. But at the same time, if the atmosphere gets to the point where it’s intolerable, we have no choice.”
Tax proposals
Johnson proposed some $800 million in taxes on corporations, airlines and the ultra rich during his campaign. So far the only significant measure that’s moving forward is a proposal to raise taxes on the sale of properties above $1 million to tackle the city’s homelessness crisis. Chicagoans would have to vote to approve such a measure.
At a press conference last week, the mayor dodged Bloomberg questions about what taxes proposed during his campaign are still on the table, limiting his comments to what has been presented in the budget.
“What I presented on Wednesday is what’s actually on the table,” he said. “There’s nothing new that I’m hiding. That’s what’s on the table.”
Still, he is setting up a subcommittee in the City Council to find new sources of revenue.
Crossroads
This isn’t the first time financial firms have battled against a tax on LaSalle Street, Chicago’s version of Wall Street. In 2016, CME and Cboe Global Markets Inc., the world’s largest options exchange, fought a similar proposal by state representative Mary Flowers.
When Chicago saw its budget deficit balloon during the pandemic, a City Council committee also debated the issue.
Chicago is at a crossroads, with persistent crime and a batch of taxes floated, testing the commitment of exchanges and firms including market makers Optiver Holding, IMC Trading and DRW Holdings, a proprietary trading company owned by billionaire Don Wilson. Corporate leaders continue to be concerned about the financial transactions tax rearing its head.
The city and its surrounding areas have already been dealt a blow by the departure of billionaire Ken Griffin’s Citadel, as well as the headquarters of companies including Caterpillar Inc., Boeing Co. as well as the local offices of Tyson Foods Inc.
Texas Governor Greg Abbott knows that all too well. In an interview with Bloomberg TV earlier this month, the Republican leader said some businesses in Chicago were “fed up,” and that he had spoken to CME about moving to the Lone Star State.
Pritzker, a scion of the Hyatt hotel fortune, knows the risks.
“We have a terrific financial industry in the state of Illinois,” he said. “We all understand that a financial transactions tax simply would encourage them all to move their servers across the borders of the state to some other state.”
