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Friday, April 11, 2014

You? You can pay tax. But LaSalle Street? Against the law...

     Two utterly true, impossible-to-argue generalizations about people: a) they like to insist they are right about everything; b) they often are wrong.
     Notice a conflict? There is nothing you can do about b); try not to be mistaken, but it still happens. But a) can be worked with, and I find if you readily accept errors as they occur, you’re way ahead of the game.
     Thus when Tom Donovan called Wednesday to say, in essence, that my column on the idea of a financial transaction tax overlooked a key point, I was not irked. I was not shamed. I was glad; I had tried to figure out pensions, absorbing a range of opinions from the mayor’s office to the Chicago Teachers Union. But I am not the Jedi Council and certainly was interested in what the former president of the Chicago Board of Trade had to say. Donovan started by comforting me: I am not alone.
     “What people either don’t know or tend to forget is: Everybody talks about a transaction tax — aldermen keep raising this — but I passed a law prohibiting a transaction tax from ever being enacted,” he said.
     Donovan happened to have a copy of the 1980 law before him and read it to me:
     “Sec. 1: No unit of local government shall levy any tax on stock commodity or options transactions. Sec. 2: No home rule unit, as defined in Article VII of the Illinois Constitution, shall have the power to change, alter or amend in any way the provision . . . ”
     OK then. Why did you pass the law?
     “The reason I did it was was to protect the exchanges from the city ever taxing them, naturally," he replied. "We were in a competitive environment, we were building buildings and I wanted our members to feel safe and secure, not subject to taxes by the city of Chicago. So I pushed through this piece of legislation."
So such a tax is impossible?
     "As much as [CTU's] Karen Lewis talks about it, you'd have to go to Springfield and change the law, which they won't be able to do."
     I've known Donovan for years and like and respect him, and felt flattered by his candor — "which they won't be able to do" has a whiff of the iron scent wafting off Michael Madigan's "Nothing-happens-that-we-don't-foreordain" way that Illinois government is run, and has been run, for years. Money always wins. Still, with a representative of the usually faceless world of Big Finance on the line, I had to ask, in my piping plebeian voice: why not? Why shouldn't brokers and bankers toss a penny in the till when they make a transaction? I pay tax when I buy a stick of gum.
     "You may pay tax on a stick of gum, but you don't pay tax on your job," Donovan said. "Markets are very competitive and price is a factor. We were always able to make that argument. I won that argument in Washington for 20 years. I was able to get that passed, my first year as president of the Board of Trade, that gave us the comfort and security to invest in the city of Chicago."
     One of those who kept trying to create a tax, Former Ald. Virgil Jones, called. "I put that into the council back in 1995, and it was tabled," he said.
     Well, points for trying, alderman.
     Odd. Religion inspires people to rant and be mean when crossed. But money replies with a murmur. From a lawyer at a big firm:
     "You, like many others, do not understand the mobility of money," he wrote. "If Chicago imposed a financial transactions tax, many of the transactions that take place here would likely go to other places that do not have a transactions tax. The CME itself might move. That would be expensive but is not hard to do. In my case, I have a national practice with no specific ties to Chicago. . . .
     "My firm has an office in Dallas and I have been considering moving there lately [no personal income tax]. If the State increases the income tax, I will move and it will take many people making a lot less money to replace the lost revenue. I was speaking with another of my partners who spends part of the year in Wyoming (also no personal income tax). He is likely to move there if taxes increase. Chicago, and Illinois, are nice places to live but they are not what they once were. Raising taxes further, rather than raising more revenue, will move Chicago and Illinois one step closer to Detroit."
     Ah, Detroit. Can't let that happen. You could argue that the history of Chicago is the history of rich folk fleeing, starting in the Prairie District and heading for Wyoming by way of Kenilworth.
     There is also a counterhistory of common folk trying to get a better deal than the one the powerful force upon them and call fair. When does that dynamic come into play?


  1. This is yet another reason Illinois has the second worst constitution of all the states.
    The special interests got all their favors locked in, whether it's public pensions impossible to change or this idiocy.

    It's Alabama's that's worse, they actually have an amendment regulating goat raising!

    But what does the Roman Pool at San Simeon have to do with this post or did you just like the photo?

  2. It reminds me of that old saying that the only problem with capitalism is capitalists. People who are under no obligation (in their minds) to use their wealth to the benefit of others will move to a different city or country to save a few bucks. As a believer, I think that they will someday pay a price for their greed but in the meanwhile they are as clueless as can be. And thanks to the Supreme Court, they can meddle even more in our politics shaping them to their benefit.

  3. For some reason, my previous comment is being held for approval. By whom?

    1. By me, David. It's my blog. I vet comments on older posts, so I know what's going up.


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