Illinois may be broke but these guys aren’t.

Illinois’ budget impasse continues and poor folks are getting hurt bad by the cuts in services. But even with a budget, Illinois couldn’t pay its bills because of a constitutional prohibition against a graduated, progressive income tax.

In simple English? The richest of the rich pay the same rate on their income as you do. And some pay less.

Who are we talking about?

Forbes’ Magazine published it list of international and Illinois billionaires. They mostly did better this year than last.

How did you do?

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Caterpiller raided by feds. Tax cheats.


When Caterpiller announced it was joining other big corporations like Boeing and moving its headquarters to downtown Chicago, Crain’s reported that it took some analysts by surprise.

Aides to Gov. Bruce Rauner say they heard about the move “this morning” and the administration was “not involved” in the decision. With Cat apparently moving existing jobs to Chicago rather than creating new ones, the company would be ineligible for Edge payroll tax credits under changes to the incentive program adopted by Rauner.

City Hall isn’t yet commenting on whether it was aware of the decision, but companies almost always notify the city when they’re setting up shop in town.

Mayor Rahm Emanuel did release a statement, saying:

“Chicago’s unparalleled talent and status as a global transportation hub give a global company like Caterpillar the tools they need to thrive for generations to come. Chicago’s strengths benefit companies throughout the region, and we look forward to working with Caterpillar as they prepare to make this move towards their future.”

The city’s main incentive program is tax-increment financing. But most of the downtown area no longer is included in a TIF district, and giving tax breaks to a company that already has publicly announced its intention to move would be politically difficult.

The Edge payroll tax credit allows giant corporations in Illinois to keep the state income tax it collects. But it is supposed to be contingent on so-called job creation.

Moving 300 executive jobs form Peoria to Chicago doesn’t qualify.

Lot of major corporations are moving their headquarters to downtown Chicago. The execs like the lakefront condos and city restaurants and bars.

Peoria doesn’t provide that.

Caterpiller wasn’t worried about losing that tax benefit. It had other plans to cheat on their taxes.

Yesterday the feds raided Caterpiller headquarters as part of an investigation of tax evasion.

The investigation appears to stem from revelations about the company’s tax strategy as outlined in a 2009 federal wrongful termination lawsuit brought by Daniel Schlicksup. The lawsuit alleged the company shifted profits overseas and to offshore shell companies to avoid paying more than $2 billion in U.S. taxes. Schlicksup settled the suit in 2012.

Two billion.

Caterpiller’s recently fired its CEO,  Doug Oberhelman.

A friend tells me that Oberhelman was at Monmouth College’s few years ago pontificating on how horribly run the state was. Mostly it was about how greedy pensioners were.

The Peoria Journal Star reported yesterday:

In the February filing, the company included the following statement on legal proceedings: “On January 8, 2015, the Company received a grand jury subpoena from the U.S. District Court for the Central District of Illinois. The subpoena requests documents and information from the Company relating to, among other things, financial information concerning U.S. and non-U.S. Caterpillar subsidiaries (including undistributed profits of non-U.S. subsidiaries and the movement of cash among U.S. and non-U.S. subsidiaries).”

The statement continued: “The Company has received additional subpoenas relating to this investigation requesting additional documents and information relating to, among other things, the purchase and resale of replacement parts by Caterpillar Inc. and non-U.S. Caterpillar subsidiaries, dividend distributions of certain non-U.S. Caterpillar subsidiaries, and Caterpillar SARL and related structures. The Company is cooperating with this investigation.”

A different strategy, the “Bermuda structure,” allegedly involved shell companies that had no business operations returning profits to the United States without paying taxes on them.

Greedy pensioners.

Karen Lewis is our guest today on Hitting Left with the Klonsky Brothers.

Illinois in financial trouble. Too many old people.


The Civic Federation’s Larry Msall

Every time the Illinois General Assembly assembles, which isn’t all that often, there will likely be a story about how Larry Msall of the Civic Federation says that the state’s financial collapse is near.

And that retirees are the reason.

Larry Msall will inevitably be described as head of a tax watchdog group. First of all, beware of groups claiming to be watchdogs.

I have a watchdog. His name is Ulysses and if a stranger comes to our house uninvited he will bite ’em in the ass.

Exactly who is the uninvited stranger that Larry Msall and the Civic Federation are on the watch for?

Apparently it is poor, working people and retirees. The uninvited strangers are us.

The Civic Federation is just one more lobby group looking out for the state’s corporate interests.

Msall is always invited to appear on WTTW’s Chicago Tonight as an impartial observer. Along with the Republican stink tank, the Illinois Policy Institute’s John Tillman

Msall is not impartial.  He’s the former VP of the Civic Committee. A corporate mouthpiece.

Let me ask you this: Is there a retired teacher, cop or state healthcare worker on the board of the Civic Federation?

Greg Hinz today reports on CAFR.

The state’s Comprehensive Annual Financial Report.

Illinois is not doing well.

Well, of course not. We’re taxing the rich too little. Corporations are given tax loopholes the size of a Florida sinkhole. And they’re cutting promised benefits to retired public employees. That takes millions out of the state’s economy.

But that is not the analysis of the Civic Federation’s Larry Msall.

The disclosure clearly represents bad news, said Laurence Msall, president of the Civic Federation, a tax watchdog group. “There’s no other position a reasonable person can hold other than that the state’s financial position continues to decline, despite the income-tax increase.” The rising deficit is being driven by increased retirement costs, both for pensions and retiree health care, Mr. Msall said.

The problem is old people.

Just too many old people.

Illinois is not too broke to give Exelon a handout.


Illinois is broke cry the corporate Civic Committee CEO’s when they dine over their three martini lunches.

Illinois is broke explains Ty Fahner as he secretly meets with the bond rating agencies that then go and lower that state and city ratings, putting pressure on the legislature to cut promised public employee pensions.

Which is what the legislature does, as in Senate Bill 1.

But when a giant billion dollar company runs into trouble with their profit margins, they eagerly run to the state for a handout.

And Senate President John Cullerton and House Speaker Madigan eagerly meet over three martini lunches to map out the plans to give them the handout.

Exelon is the state’s largest power company.

Exelon Corp. is laying the groundwork with state leaders for legislation next year that the company says may be necessary to keep half its Illinois nuclear fleet from closing.

Company executives and lobbyists have told lawmakers and other interested parties that three of the six nukes Exelon operates in Illinois are at risk of shutting down because they’re unprofitable or struggling to make money. Exelon representatives say the current market environment doesn’t reward the facilities for the environmental and reliability benefits they provide.

Exelon officials have met with Senate President John Cullerton. And CEO Chris Crane met in recent weeks with Illinois House Speaker Michael Madigan to brief him on the problems.

“It was about market conditions and the impact on the nuclear fleet,” Madigan spokesman Steve Brown says. “There was no request made.”


Ford CEO Alan Mulally. Stealing gold fillings from the mouths of pensioners.

alan Mulally

Ford CEO, Alan Mulally.

Every time an Illinois Ford employee receives their paycheck and looks at the state income tax deduction, they probably don’t know that those dollars are going into the pocket (figuratively) of FORD CEO Alan Mulally.

Because of tax credits by the pension busting Illinois General Assembly Ford is one of nine giant corporations that gets to keep the state income tax they collect from employees.

And you ask why is Illinois broke.

Mulally is one of the top ten paid CEO’s in the United States.

On a recent appearance on Steven Colbert’s show:

An exuberant Colbert described Mulally as “an icon of American capitalism.”

The CEO played straight man to Colbert’s quips about the power of a Mustang to attract the opposite sex and his labeling of General Motors and Chrysler as Bolsheviks for taking government assistance in 2009 when they filed for bankruptcy.

Mulally’s attempts to take the high road included an explanation that the best way to help now-bankrupt Detroit is by hiring people and bringing work back to America.

Colbert’s solution: pulling out the gold fillings of pensioners.

You’re too late Colbert.

He already does.

Nine Illinois corporations get to collect employee income taxes and keep what they collect.


Crain’s graphic.

Hyde Park Democrat Barbara Flynn Currie blames retirees for the pension crisis. We agreed to a benefit and then when she and her House colleagues didn’t pay the bill, we didn’t vote her out of office.

Maybe she has a point.

Here’s another reason to throw her out of the House.

Nine Illinois Corporations get to collect – through payroll deduction – employee income taxes.

And they get to keep what they collect.

Motorola, Sears, Chrysler, Navistar, Mitsubishi, Continental Tire, Ecolab, Champion Labs and Ford.

The tax loop hole has cost the state nearly half a billion dollars over the past decade.

Chicago BOT chief, Patrick Arbor. “My word is my bond.”

Thirty-year tax cheat and former head of the Chicago Board of Trade, Patrick Arbor (2:49 on the video).

“My word is my bond,” says former Chicago Board of Trade President Patrick Arbor.

We will get back to Patrick Arbor and his words in just a few minutes.

But first a quick mention of Archer Daniel Midlands, the industrial food giant that is trying to heist millions of dollars in tax breaks from Illinois taxpayers by threatening to move out of state from their Decatur headquarters. This is a bold move on the best of days, since ADM doesn’t pay any taxes now. But they want to pocket, seriously, the payroll deduction that their employees would ordinarily pay to the state in income taxes.

“Why not,” asks ADM? “Illinois has done it for other giant corporations for years.”

And ADM has a point.

“We certainly are aware of the incentives that have been offered to other companies. We’ve done our research,” said ADM spokeswoman Victoria Podesta. “I think it creates precedent. I think precedent is important.”

Tate & Lyle moved its headquarters to Hoffman Estates after receiving a deal for $15 million in incentives. The Sears deal included about $100 million for that company and the corporation that runs the Chicago Mercantile Exchange and the Chicago Board of Trade after it, too, threatened to leave Illinois.

Ah, yes. the Chicago Board of Trade.

And its former president, Patrick Arbor.

Pat is involved in a nasty divorce case. As a result of court testimony, Arbor has admitted to being a monster tax cheat for over 30 years.

His Board of Trade cheated legally.

But not its president, Patrick Arbor.

Arbor has fled the country and is living in Italy. He is threatened with arrest if he steps foot in the U.S. again.

The Sun-Times’ Mark Brown:

A Cook County judge issued a new bench warrant on Tuesday for Arbor, 76, a pal of many politicians including former Mayor Richard M. Daley, as well as a business and civic fixture still listed as a trustee at Loyola University.

Crain’s Shia Kapos:

In the court papers, Mr. Arbor disclosed that he has $13 million in a structured account that’s held in a foundation in Lichtenstein but with assets in the Bank of Frey & Co. in Switzerland. (The two countries border each other.)

He also says, in the document, that a safe he had in his Water Tower Place home had $400,000 in gold, worth about $1,700 a piece, as well as $80,000 in Euros and $90,000 in U.S. dollars. He accuses his ex-wife of taking the contents of the safe.

Ms. Vigilante testified that “the marriage was dependent on him giving me access to his e-mails and phones because I suffered from a significant amount of infidelity with him.”

During testimony, Mr. Arbor acknowledges using his grandparents’ last name of Mazzoni on his Swiss accounts. Her lawyers questioned him about his intent to buy a home outside of the U.S., and he acknowledged looking at properties all over the world, including Italy, Moldova, Kiev, Switzerland, the Ukraine and Panama. He denied he intended to buy.

Mr. Arbor says when he worked at London Investment Trusts earlier in his career, he put $8.5 million in a London bank.

Asked by his lawyer whether he reported that to the federal or state government for income tax purposes, Mr. Arbor said, “I did not, sir, because, as you know, major corporations in the United States like Apple and Google do not report on monies made offshore.”

Mr. Arbor details having to spend extraordinary amounts of money on jewelry for his ex-wife. “She was obsessed,” he said during testimony.

He didn’t reveal to her that he had any offshore accounts until he agreed to pay 17,000 euros ($23,000) for a necklace in 2009. They saw it while at a jewelry store in Capri.

Illinois may be broke. But one percent of its people sure aren’t.

Illinois is broke? Cut teacher pensions and give millions to Archer Daniels Midland.


Remember the phony front group that Civic Committee president Ty Fahner set up called Illinois is Broke?

He wanted you to think the state was broke because of huge pensions to teachers, firemen and cops.

Y’know. That $43,000 a year average teacher pension is a real budget buster.

Meanwhile Archer Daniels Midland, the giant food processing corporation is leaving job-starved Decatur, Illinois. But not before asking for millions of dollars in tax breaks from Illinois.

House Bill 380 has been scheduled for a hearing in Chicago Tuesday and could wind up on the agenda for the state Legislature’s six-day fall session that begins Oct. 22.

The measure sponsored by Rep. John Bradley (D-Marion) would retool the state’s EDGE tax credit, giving ADM a 15-year credit to be applied against payroll withholdings involving up to 200 employees.

The legislation also would grant the company a 10-percent break on its utility taxes for a 30-year period.


The state shouldn’t fast-track “unprecedented” legislation to give Archer Daniels Midland tax breaks possibly worth “tens of millions” of dollars to locate a new global headquarters in Chicago, a lawmaker representing the firm’s Downstate base said Monday.

In the first sign of legislative turbulence for the ADM package, state Sen. Andy Manar (D-Bunker Hill), whose district covers Decatur, said he has had “countless conversations” with constituents “angered” by ADM’s recent announcement to move as many as 200 jobs out of Decatur.

“Now, only eight days later, there is legislation moving in the House of Representatives to give ADM tens of millions [of dollars] to potentially stay in Illinois and move to Chicago. Not so fast. Illinois is facing tough times. Decatur is facing tougher times with the highest unemployment rate in the state,” Manar said in a prepared statement.

Says the Herald-Review:

At the same time Illinois lawmakers are expected to debate a plan to strip retirement benefits from teachers, prison guards and university employees, they also may take up a proposal to deliver tax breaks to one of the state’s biggest corporations.

The in box. Honoring contracts. Avoiding litigation.

The Chicago Tribune published my last letter to the editor on June 19, 2013—-I am going to try again.  I sent the copy below to the Chicago Tribune
Metra negotiated a separation agreement for CEO Alex Clifford that carries a potential price tag of $740,000.  Clifford’s three-year contract was due to expire in February 2014 (eight months from now).  The term that interests me is CONTRACT.  The Metra board has chosen to honor Clifford’s contract with a sum of money nearly three-times Clifford’s annual salary.  The action was taken “so that Metra can move forward with a clean slate and avoid wasting time and money on attorneys.”  There has been no suggestion of “contract reform.”  Take heed legislators in Illinois, public servants in the state of Illinois are in the same position as Clifford.  Honor our contracts (pensions) make any “pension reforms” to future servants.  Follow the Constitution of the state of Illinois and Metra’s lead, and save time and money that will be wasted on attorneys’ fees. Our pensions need to be honored NOT reformed.
– Cathleen Bylina, Retired Teacher