To: The Illinois State House, The Illinois State Senate, and Governor J.B. Pritzker
Fast-Track Pass H.B. 106 to Solve Illinois' Budget Crisis
Illinois General Assembly and Governor Rauner: The cuts to higher education and essential services that are a result of Illinois’ budget crisis are unacceptable and impose unnecessary, severe harm on the people of Illinois. Illinois needs to fix its revenue shortfall problem in order to meet its most basic obligations to the people. Those you are tasked to serve hereby instruct you to act immediately to support the will of the people by fast-track passage of House Bill 106, the Financial Transactions Tax Act, also known as the LaSalle Street Tax.
Why is this important?
There is a solution to Illinois’ budget impasse, but the solution requires unity and a willingness to act. You see, a budget that calls for funding requires sufficient capital. Illinois simply has insufficient revenue to support the necessary funding, but Illinois can quickly generate upwards of ten billion dollars a year without raising any existing taxes. Rather, House Bill 106 assesses transactions not yet being taxed.
Each of you pays a 6.25% tax for general merchandise transactions, 1% for qualifying food, drugs, and medical appliances, and wagering starts at 15%.
Yet those financially able to gamble at the Chicago Board Options Exchange and the Chicago Mercantile Exchange, while utilizing a wide variety of Illinois services, pay no tax at all to Illinois on their transactions. Nothing. The vast majority of trading is done by large banks, hedge funds, large businesses, and very wealthy individuals. There is an average $900 trillion traded per year on those exchanges, more than five billion contracts traded per year.
Illinois Representative Mary Flowers proposed House Bill 106, for traders to pay a single dollar contract fee on agricultural futures and futures options traded, and a $2/contract fee on non-agricultural contracts. That averages 0.001 of 1 percent of average contract value. The bill is currently active in committee and subcommittee chaired by Representative John Bradley, and it absolutely needs a huge push by the public.
Transactions involving securities held in retirement accounts or mutual funds are exempt. The tax would generate an estimated $10 billion in revenue annually, enough to avoid the currently projected cutbacks for everyone.
Fast-track passage of House Bill 106 should be our single greatest imminent priority. The alternative is an ever increasing financial burden placed squarely on the financially weak, on public employees, retirees, students, educators, the disabled and infirm, the homeless, and the rest of us who desire, or depend upon, a state government capable of serving its core functions.
People will tell you there is no point to making the effort. There is. Many people’s lives and livelihoods depend on it.
People will say these exchanges will move out of Illinois. That is a particularly annoying deception.
The exchanges’ owners and operators, the CME and CBOE Groups, are not the ones paying the transaction tax, so they have no incentive to move. The buyers and sellers will pay.
Also, many products traded, like the S&P 500 index futures, are exclusively licensed to these exchanges so cannot be traded elsewhere.
Critically, millions of dollars are sunk into the computer-based infrastructures in Illinois. The expense of relocating the hard-wired infrastructure would not be economically feasible. The Aurora facility alone spans 7.5 football fields in size.
The setup of co-locators to matching engines along straight-line and fiber-optic and microwave transmission is such that major traders position their offices physically in close proximity to these exchanges; whereby, the transmission of information is described by them as almost at the speed of light. Traders would have little incentive to upset that setup as a result of HB 106 because that speed due to proximity substantially increases their profits.
Please understand, taxes of this type are successfully implemented in more than 25 countries without causing any exchanges, or a significant volume of traders, to trade elsewhere. When thought through, arguments against passage of H.B. 106 are frivolous when compared to the benefits to every person in Illinois.
Again, we all must take the initiative to instruct our legislators. Write a letter and mail it. Make contact with your legislators and the Governor demanding immediate passage of House Bill 106. It is the duty of those who have retained a moral compass and been made aware of this opportunity to solve the budget impasse.
Each of you pays a 6.25% tax for general merchandise transactions, 1% for qualifying food, drugs, and medical appliances, and wagering starts at 15%.
Yet those financially able to gamble at the Chicago Board Options Exchange and the Chicago Mercantile Exchange, while utilizing a wide variety of Illinois services, pay no tax at all to Illinois on their transactions. Nothing. The vast majority of trading is done by large banks, hedge funds, large businesses, and very wealthy individuals. There is an average $900 trillion traded per year on those exchanges, more than five billion contracts traded per year.
Illinois Representative Mary Flowers proposed House Bill 106, for traders to pay a single dollar contract fee on agricultural futures and futures options traded, and a $2/contract fee on non-agricultural contracts. That averages 0.001 of 1 percent of average contract value. The bill is currently active in committee and subcommittee chaired by Representative John Bradley, and it absolutely needs a huge push by the public.
Transactions involving securities held in retirement accounts or mutual funds are exempt. The tax would generate an estimated $10 billion in revenue annually, enough to avoid the currently projected cutbacks for everyone.
Fast-track passage of House Bill 106 should be our single greatest imminent priority. The alternative is an ever increasing financial burden placed squarely on the financially weak, on public employees, retirees, students, educators, the disabled and infirm, the homeless, and the rest of us who desire, or depend upon, a state government capable of serving its core functions.
People will tell you there is no point to making the effort. There is. Many people’s lives and livelihoods depend on it.
People will say these exchanges will move out of Illinois. That is a particularly annoying deception.
The exchanges’ owners and operators, the CME and CBOE Groups, are not the ones paying the transaction tax, so they have no incentive to move. The buyers and sellers will pay.
Also, many products traded, like the S&P 500 index futures, are exclusively licensed to these exchanges so cannot be traded elsewhere.
Critically, millions of dollars are sunk into the computer-based infrastructures in Illinois. The expense of relocating the hard-wired infrastructure would not be economically feasible. The Aurora facility alone spans 7.5 football fields in size.
The setup of co-locators to matching engines along straight-line and fiber-optic and microwave transmission is such that major traders position their offices physically in close proximity to these exchanges; whereby, the transmission of information is described by them as almost at the speed of light. Traders would have little incentive to upset that setup as a result of HB 106 because that speed due to proximity substantially increases their profits.
Please understand, taxes of this type are successfully implemented in more than 25 countries without causing any exchanges, or a significant volume of traders, to trade elsewhere. When thought through, arguments against passage of H.B. 106 are frivolous when compared to the benefits to every person in Illinois.
Again, we all must take the initiative to instruct our legislators. Write a letter and mail it. Make contact with your legislators and the Governor demanding immediate passage of House Bill 106. It is the duty of those who have retained a moral compass and been made aware of this opportunity to solve the budget impasse.