B12 Solipsism

Spreading confusion over the internet since 1994

Archive for the ‘corporate_welfare’ tag

The Houston Stadium Grift

without comments

Fire hydrant Flood on Randolph

Speaking of corporate welfare and taxpayer money, professional sports owners are worse than college sports organizations, if that is even possible. We’ve long fulminated at this infuriating trend of billionaire team owners stealing tax dollars from cities, usually with a wink-and-nod from the local politicians.

Dave Zirin of The Nation notes that the City of Houston shoveled money to Lamar Alexander, money that could be spent on more practical matters, like cleaning up after a flood, or purchasing homes in flood plains and reverting them back to flood plains…

Taxpayer-subsidized stadiums have long become a substitute for anything resembling urban policy in the 21st century. And now as roads, bridges, and humanitarian shelters decay, they stand exposed as neoliberal Trojan horses that take public dollars and magically transform them into private profit for billionaire sports owners. They are a scam, a con, and, not surprisingly, a grifter like Osteen has long had his hand in this honey pot.

[Money-changer-in-the-temple Joel] Osteen’s church was once a hoops hallowed ground called The Summit, home of the Houston Rockets and the site of the magic made by Hakeem Olajuwon and his 1994 and 1995 teams that won back-to-back NBA titles. In 1995, flush with this success, Rockets owner Les Alexander demanded a new sports arena from the city. These negotiations eventually resulted in the Toyota Center, which opened in 2003, even though the city voted down this plan in a 1999 referendum. In the end, the people of Houston paid $182 million of the $235 million in construction costs. Toyota paid $100 million in naming rights, all of which went to Les Alexander.

That was just the beginning. Texas taxpayers have continuously paid for upgrades in the subsequent years. In 2013, the public even paid for a new $8 million scoreboard to help prepare Houston for the NBA All-Star Game. (Imagine what that $8 million could be used for right now.)

I spoke to Neal DeMause who runs the stadium news site Field of Schemes. He said, “In a sane world, the city of Houston would still own The Summit, rather than have replaced it at public expense so the Rockets owner could have a shinier plaything, and could make its own decisions about how to use it in emergencies. I suppose it’s a small silver lining that the scads of redundant sports facilities littering the landscape make for a surplus of good disaster shelters now—though if cities would spend billions of dollars a year on flood proofing and reducing carbon emissions instead of subsidizing sports venues, they’d probably get better bang for their buck.”

The Rockets-Osteen connection is tragically just a microcosm in Houston of what tax-funded stadium priorities have produced. The Houston Texans were handed $289 million of public financing for their stadium, with minimal debate. They even took $50 million in public funding just for 2017 Super Bowl renovations. That money went into “installing Wi-Fi in the stadium and upgrad[ing] the club and suite areas of the building.”

As for Les Alexander, he just announced that he was selling the Rockets for a staggering $2 billion. Alexander bought the team in 1993 for $85 million. There is no way Alexander would be able to command that asking price without the public subsidies and new arenas underwritten by the city of Houston.

(click here to continue reading The Houston Stadium Grift Comes Home to Roost | The Nation.)

Vinyl Bird - Townes Van Zandt - Live at the Old Quarter, Houston, TX
Vinyl Bird – Townes Van Zandt – Live at the Old Quarter, Houston, TX

I am of the opinion that billionaire sports team owners should be embarrassed to ask for handouts from municipalities, and should be able to pay for their own damn stadiums. Or else, sell their team to the city, like the Green Bay Packers.

Hoop Dream
Hoop Dream

Oh, and what about sports stadiums automatically being used as shelters, as was once proposed

Written by Seth Anderson

September 2nd, 2017 at 9:01 am

Another College Sports Boondoggle

without comments

The Twelfth Player in Every Football Game
The Twelfth Player in Every Football Game

In addition to the elimination of property tax exemptions for rich nonprofits that we’ve mentioned previously, here’s another piece of tax reform I support – the repeal of the tax payer subsidy to college sports…

Eric Zorn writes:

College sports is a big-time business, tickets are in high demand at major universities and charging what the market will bear is the American way. In fact, judging by the secondary market on StubHub, where single seats to the Ohio State game are going for more than $2,000, tickets to Michigan football games are still vastly underpriced.

What I don’t understand, however, is the law that allows ticket buyers to write off 80 percent of their “preferred seating donation” as a charitable contribution for federal tax purposes.

That’s right. High rollers in the swankiest suites can subtract $4,500 from their taxable income, a benefit worth up to $1,782 off their tax bill, as though they had given that money to a soup kitchen or hurricane relief.

Put another way, for each such privileged fan, the federal government effectively provides a $1,782 ticket subsidy.

And, in the mid-1980s, when these preferred-seating donation scams first arose, the Internal Revenue Service issued a common-sense ruling that a mandatory donation linked to the purchase of seasons tickets was a quid pro quo and so not deductible for tax purposes.

Legislators representing schools in the powerful Southeastern Conference “went crazy,” said University of Illinois emeritus law professor John D. Colombo, a specialist in tax laws governing charitable organizations. And in 1988, Congress added subsection 170(l) to the IRS code that specifically allowed for an 80 percent deduction on donations to “institutions of higher education” that granted “the right to purchase tickets for seating at an athletic event.”

In 2015, the Obama administration asked Congress to repeal subsection 170(l), claiming it will drain at least $2.5 billion from public coffers over the next decade. Duke University law professor Richard Schmalbeck estimated the 10-year tax receipts loss at $20 billion.

Congress ignored the suggestion.

(click here to continue reading If Congress can’t eliminate the college football ‘charity’ scam, what hope is there for a tax overhaul? – Chicago Tribune.)

Ain’t that a bitch? Our tax dollars hard at work, inflating college coaches salaries, fancy high-tech training facilities, inflating player salaries, oh, wait, the colleges don’t even pay their athletes a stipend, the players work for basically, “exposure”.  Hmmm, maybe there are deeper issues that need to be solved with Division 1 teams. 

Oklahoma vs Texas
Oklahoma vs Texas

Written by Seth Anderson

September 2nd, 2017 at 7:58 am

IL Supreme Court Weighs Whether Hospitals Can Avoid Property Tax

without comments

Sun Setting On A Sacred Cow
Sun Setting On A Sacred Cow

Personally, I don’t think hospitals should be exempt from property tax. What exactly is the standard here, that if a corporation “does good” they don’t have to pay their fair share of tax? Who defines what the good is? Who monitors it? 

Lisa Schencker reports:

Illinois not-for-profit hospitals currently are exempt from having to pay hundreds of millions of dollars in property taxes so long as the value of their charitable services is equal to or greater than their estimated tax liabilities.

But some municipalities argue that many not-for-profit hospitals are more like businesses, making handsome profits. They say hospitals should have to contribute their fair share of taxes to their communities, like any other business. A 2009 report by the Center for Tax and Budget Accountability said 47 Chicago-area not-for-profit hospitals had property tax exemptions worth a total of $279 million.

About 156 of Illinois’ more than 200 hospitals are not-for-profit.

In the case before the state Supreme Court, the city of Urbana and others argue that Carle Foundation Hospital in Urbana should not be exempt from paying property taxes. They say the 2012 state law allowing hospitals to be exempt if they provide charity equal in value to their property tax liabilities is unconstitutional. The state constitution only allows such exemptions if the property in question is used exclusively for charitable purposes, they say.

Urbana Mayor Laurel Prussing said after oral arguments Thursday that regardless of what the court decides — or doesn’t decide — the issue is one the legislature should weigh.

The hospital association might work with lawmakers to craft a new law if the court strikes the current one down. Association President and CEO A.J. Wilhelmi has said the group will “assess all options” once a ruling is made.

“Why should the most profitable companies in the state be shifting their burden onto every other business and homeowner?” Prussing asked.

Last year, a study published in the journal Health Affairs named Carle the 10th most profitable hospital in the country when it came to patient care services, with $163.5 million in profits in fiscal year 2013.

 

(click here to continue reading Illinois Supreme Court weighs whether hospitals must pay property taxes – Chicago Tribune.)

There Are Some Things To Talk About
There Are Some Things To Talk About

I don’t believe that churches should be exempt either, unless they can scientifically prove that god exists. Are medical cannabis dispensaries tax exempt? Planned Parenthood clinics? Is Feeding America’s offices on Wacker Drive tax free? What about ACLU headquarters? Union halls? Bars and taverns? Wrigley Field? Seriously, where does it end? Our society would be much better off and more equitable if corporations didn’t get so many freebies from taxpayers. I’ve always liked the idea of a “mandatory minimum” for corporations above a certain size – the idea that Boeing and Archer Daniels Midland and all the rest can’t evade taxes by exploiting shell corporations and loopholes.

Written by Seth Anderson

January 16th, 2017 at 10:12 am

Thursday Leftovers – Plate 7

without comments

If I wasn’t such a lazy blogger, these would be full-blown posts, interspersed with actual thoughts of mine, but I am, so belly up to the blog bar…

https://i2.wp.com/farm8.staticflickr.com/7310/28082730795_2210a259c3_z.jpg?resize=640%2C480&ssl=1

Shortly after Snyder became owner, the Skins lobbied the Prince George’s County authorities to authorize a ban on all pedestrians from entering the grounds of Jack Kent Cooke Stadium (renamed FedExField after the delivery firm offered Snyder $205 million), even on public sidewalks. No public hearings were held before the ban went into effect. There was essentially no public transportation to the games, so the ban meant fans had no choice but to drive and park in the Snyder-owned lots.

Pedestrian ban/parking monopoly in hand, Snyder jacked the parking rate up from $10 to $25.

Szymkowicz found out about the ban after a friend had given him a pass to sit in the owner’s suite for a Washington/Dallas game at FedEx in 2001, but didn’t have a parking pass. Not wanting to pay $25 for a free ticket, Szymkowicz parked for free at Landover Mall, located about a half-mile from FedEx Field’s front entrance, and walked over, only to be told by police that walking into the stadium was against the law.

The county’s ban was repealed in October 2004. Szymkowicz not only had beaten Snyder, he’d also exposed the owner, who’d positioned himself as an everyfan when he bought the team, as the anti-fan phony he was.

Snyder got up to his old parking tricks again soon, however. Only the venue had changed.

(click here to continue reading The Atlanta Braves Borrowed Their Parking Scam From Dan Snyder.)

Bowers & Wilkins
Bowers & Wilkins headphones, one of many audio devices using a 3.5mm jack in my home or office

Damn, I hope Apple doesn’t remove the 3.5mm headphone jack. I have too many third-party headphones, speakers, musical instruments, etc. that wouldn’t connect anymore. Dongles are irritating to keep track of, and as Jason Snell writes, there doesn’t seem to be any real benefit to removing the headphone jack, not that anyone has come up with anyway.

Is Apple removing the headphone jack from the iPhone? Nobody really knows, though rumors have swirled for quite a while now. A recent exchange between Nilay Patel and John Gruber returned this debate to the foreground last week.

Of course, the truth is that it’s very hard to talk about this rumor in the absence of actual information. Any move like this by Apple would be accompanied with a raft of other information, including Apple’s rationale, any new features enabled by the removal, and of course adapters for existing hardware. In the absence of all that, people are able to fill in the blanks with bogeymen or rainbows depending on their point of view.

Before digging into the possible reasons for the move, it’s worth mentioning why this is such a hot-button issue in the first place. It’s all about inconvenience. As a standard that’s been around for more than a hundred years, there are a massive number of devices that support the 3.5mm headphone jack. Not just phones and tablets, but computers and amplified speakers and mixers and pretty much any other device in existence that can play audio.

There’s no doubt that if Apple were to remove the headphone jack, there would be some sort of adapter to allow headphones and speakers with headphone plugs to get audio out of an iPhone. But of course, adapters cost money and are easily lost or forgotten and can be bulky and annoying.

(click here to continue reading Searching for a good reason to remove the headphone jack – Six Colors.)

Debt is a finger laying on the scale of the economy. If a college education, for instance, didn’t cost so much, perhaps more small businesses could be launched… 

Young people very well may lead the country in entrepreneurship, as a mentality. But when it comes to the more falsifiable measure of entrepreneurship as an activity, older generations are doing most of the work. The average age for a successful startup-founder is about 40 years old, according to the Kauffman Foundation, a think tank focused on education and entrepreneurship. (In their words, one’s 40s are the “peak age for business formation.”)  The reality is that the typical American entrepreneur isn’t that hover-boarding kid in a hoodie; it’s his mom or dad. In fact, the only age group with rising entrepreneurial activity in the last two decades is people between 55 and 65.

So, why hasn’t Millennial entrepreneurship kept pace with either media expectations or past generations?

The answer begins with more debt and less risk-taking. The number of student borrowers rose 89 percent between 2004 and 2014, as Lettieri said in his testimony. During that time, the average debt held by student borrowers grew by 77 percent. Even when student debt is bearable, it can still shape a life, nudging young people toward jobs that guarantee a steady salary. Entrepreneurship, however, is a perilous undertaking that doesn’t offer such stability. There is also some evidence that young people’s appetite for risk-taking has declined at the same time that their student debt has grown. More than 40 percent of 25-to-34-year old Americans said a fear of failure kept them from starting a company in 2014; it 2001, just 24 percent said so.

The rarity of Millennial entrepreneurs doesn’t just deflate a common media myth—it could have lasting consequences for the competitiveness of the American economy. Although venture-capital investment has grown in the last decade, the majority of “startups” are really what most people consider “small businesses.” A new bodega, coffee shop, or small construction firm doesn’t seem like a radical act of innovation. But the government considers such companies to be startups, and they’re getting rarer as a handful of large firms dominate each sector of the U.S. economy. Three drug stores—CVS, Walgreen’s, and Rite Aid—own 99 percent of the national market. Two companies—Amazon and Barnes & Noble—sell half of the country’s books. If it is not quite a new Gilded Age for America’s monopolies, it is certainly a new dawn for its oligopolies.

(click here to continue reading The Myth of the Millennial Entrepreneur – The Atlantic.)

Go Teach All Nations
Go Teach All Nations

If you call yourself a Christian, and you enthusiastically support Donald Trump, you are a hypocrite. Plain and simple.

Those who believe this is merely reductionism should consider the words of Jesus: Do you have eyes but fail to see and ears but fail to hear? Mr. Trump’s entire approach to politics rests on dehumanization. If you disagree with him or oppose him, you are not merely wrong. You are worthless, stripped of dignity, the object of derision. This attitude is central to who Mr. Trump is and explains why it pervades and guides his campaign. If he is elected president, that might-makes-right perspective would infect his entire administration.

All of this is important because of what it says about Mr. Trump as a prospective president. But it is also revealing for what it says about Christians who now testify on his behalf (there are plenty who don’t). The calling of Christians is to be “salt and light” to the world, to model a philosophy that defends human dignity, and to welcome the stranger in our midst. It is to stand for justice, dispense grace and be agents of reconciliation in a broken world. And it is to take seriously the words of the prophet Micah, “And what does the Lord require of you but to do justly, and to love kindness and mercy, and to humble yourself and walk humbly with your God?”

Evangelical Christians who are enthusiastically supporting Donald Trump are signaling, even if unintentionally, that this calling has no place in politics and that Christians bring nothing distinctive to it — that their past moral proclamations were all for show and that power is the name of the game.

The French philosopher and theologian Jacques Ellul wrote: “Politics is the church’s worst problem. It is her constant temptation, the occasion of her greatest disasters, the trap continually set for her by the prince of this world.” In rallying round Mr. Trump, evangelicals have walked into the trap. The rest of the world sees it. Why don’t they?

(click here to continue reading The Theology of Donald Trump – The New York Times.)

Cell phone-iphile
Cell phone-iphile

Speaking of carelessness:

New Jersey governor Chris Christie, is yet again facing scrutiny for his involvement in the 2013 George Washington Bridge scandal. In the latest “Bridgegate” twist, the New Jersey governor can’t account for the phone he used to send text messages when the bridge was partially shut down—allegedly as political retribution—and during the subsequent legislative hearings, which could harm the failed presidential candidate’s chances of getting tapped for the No. 2 job.

Two of Christie’s former allies, Bridget Anne Kelly and Bill Baroni, are pushing prosecutors to introduce more evidence ahead of their criminal trial in September. Facing charges related to the lane closures, which created a days-long traffic jam roughly two and a half years ago, the duo is seeking the cell phone used by Christie during the scandal, but both the governor and federal prosecutors say they don’t know where it is. Gibson Dunn, the law firm Christie hired for the case, said it returned the phone after clearing the politician in the case, but did not specify to whom it was returned, Bloomberg reports.

News of Christie’s missing cell phone comes less than a day after F.B.I. director James Comey labeled Hillary Clinton “extremely careless” in her use of her private e-mail server while secretary of state, though he stopped short of recommending that criminal charges be brought against her. During his bid for president, Christie—who has allegedly filled the position of The Donald’s “manservant”, among other campaign roles—was quick to condemn Clinton for her e-mail practices. Now, it seems the governor’s national aspirations could be derailed by his own scandal. With a Bridgegate-saddled Christie on the ticket, Trump’s attacks on the former secretary of state would be weakened and introduce further ethical issues to the presumptive G.O.P. nominee’s campaign.

(click here to continue reading “Manservant” Chris Christie Can’t Find His Bridgegate Cell Phone | Vanity Fair.)

Your Confidence Might Be Shattered
Your Confidence Might Be Shattered

and speaking of idiots:

Trump currently dismisses climate change as a hoax invented by China, though he has quietly sought to shield real estate investments in Ireland from its effects.

But at the Republican presidential contender’s Palm Beach estate and the other properties that bear his name in south Florida, the water is already creeping up bridges and advancing on access roads, lawns and beaches because of sea-level rise, according to a risk analysis prepared for the Guardian.

In 30 years, the grounds of Mar-a-Lago could be under at least a foot of water for 210 days a year because of tidal flooding along the intracoastal water way, with the water rising past some of the cottages and bungalows, the analysis by Coastal Risk Consulting found.

Trump’s insouciance in the face of overwhelming scientific evidence of climate change – even lapping up on his own doorstep – makes him something of an outlier in south Florida, where mayors are actively preparing for a future under climate change.

Trump, who backed climate action in 2009 but now describes climate change as “bullshit”, is also out of step with the US and other governments’ efforts to turn emissions-cutting pledges into concrete actions in the wake of the Paris climate agreement. Trump has threatened to pull the US out of the agreement.

And the presidential contender’s posturing about climate denial may further alienate the Republican candidate from younger voters and minority voters in this election who see climate change as a gathering danger.

(click here to continue reading Water world: rising tides close in on Trump, the climate change denier | US news | The Guardian.)

Until next time…

Written by Seth Anderson

July 7th, 2016 at 8:48 am

Oil Industry Begs Court to Block Rail Transport Safety Rules Because of Cost

without comments

All That Meat and No Potatoes
All That Meat and No Potatoes…

Shocking, I know, but Exxon Mobil and Chevron, et al, don’t want to alter their profit streams, asking to be able to continue sending bomb trains throughout the country. The reason? Updating the safety equipment would cost money. What a compelling argument, worthy of a 6th grade debate team. 

The American Petroleum Institute, the industry’s main trade group, petitioned the United States Court of Appeals for the District of Columbia Circuit to block key provisions of the rules, which were unveiled this month by Anthony Foxx, the transportation secretary. The petition was filed on Monday.

The trade group, which represents companies like Exxon Mobil and Chevron, has long argued that forcing oil producers and shippers to use newer tank cars and replace older models would impose high costs on the industry and lead to a shortfall in tank car capacity.

The petition seeks to block a requirement that older tank cars be retrofitted with new safety features designed to prevent them from spilling oil or rupturing in a derailment. It also challenges a requirement that tank cars be equipped with new electronic braking systems or face operational restrictions.

 

(click here to continue reading Oil Industry Asks Court to Block Rail Transport Safety Rules – NYTimes.com.)

If Exxon Mobil were forced to spend $100,000,000 updating the bomb cars,  ((a number I just pulled out of the air, and probably a lot more than they would actually pay)) would it be a large enough number to reduce their annual profits measurably? In 2014 alone, ExxonMobil reported revenue of $394,105,000,000. Chevron’s reported revenue for 2014 was $211,970, 000,000 by the way. I would hazard a guess their accountants are top notch, and most of the costs of updating bomb trains would be written off as operating expense, right? The oil industry has been making immense, unimaginable profits for decades, or more.

In other words, protesting that updating the rail cars so that they don’t blow up communities and cause fires that last for weeks because updating the rail cars would cost too much is a lame argument. Cries pleading poverty from corporations as wealthy as Chevron is laughable. 

Love Is Letting Go
Love Is Letting Go

Not that the Transportation Department and Barack Obama will listen to me, but my negotiation points would include the tax subsidies the oil and gas industry currently enjoy: fix the bomb trains and you get to keep half of your tax subsidies. 

The oil industry’s lobbyists like to argue that its array of tax write-offs (which allow companies to deduct everything from drilling costs to the declining value of their wells) aren’t any different than other deductions for less publicly reviled companies. Cutting them will discourage new exploration and put jobs at risk, they claim.

Yet, some of the breaks are anachronisms that date back almost to the days of John D. Rockefeller. And in a world of permanently high crude prices, there’s very little rationale for subsidizing the bottom lines of companies like ExxonMobil and BP.   

Make no mistake, either: Those profits are perfectly healthy. Between drilling and refining, Exxon’s U.S. operations alone earned $7.5 billion after taxes in 2012. California-based Occidental Petroleum Corporation, one of the so-called “independent” oil companies and the top oil driller in Texas, raked in $7.1 billion via its oil and gas division. 

(click here to continue reading America’s Most Obvious Tax Reform Idea: Kill the Oil and Gas Subsidies – The Atlantic.)

Written by Seth Anderson

May 13th, 2015 at 9:20 am

N.F.L. Needed A Handout from Chicago To Host Draft Town

without comments

The Twelfth Player in Every Football Game
The Twelfth Player in Every Football Game…

I am not a fan of football – I couldn’t name five starters on any NFL team – but while reading about the Draft Town event that muddled up downtown traffic all weekend

When N.F.L. executives chose last year to move the draft for the first time in a half-century, the decision was based as much on issues in New York as opportunities elsewhere.

But the three-day event in Chicago went so well that the league now faces a new choice: whether to return here next year or move the draft to yet another city.

On Thursday and Friday, 110,000 people visited Draft Town, the free fan festival in Grant Park across the street from the theater where the draft was held. On Saturday, larger crowds were expected when selections in the fourth through seventh rounds were announced at the festival. The crowds far exceeded the league’s original estimates.

Many fans who came to Chicago were from N.F.L. cities within driving distance — Cincinnati, Cleveland, Detroit, Green Bay, Indianapolis, Kansas City, Minneapolis and St. Louis — giving the draft a Midwestern feel.

 “How could we not come?” said Alex Paszkowski, a Packers fan who drove 90 minutes from Milwaukee with two friends.

(click here to continue reading City for Next Year’s Draft? N.F.L. Could Have Its Pick – NYTimes.com.)

Rahm Has A Message For You
Rahm Has A Message For You…

I read this tidbit:

The league attracted sponsors for its fan festival and persuaded the host city, Chicago, to contribute. The success of the event this year could give the N.F.L. leverage in negotiations with other cities.

“When you negotiate with the N.F.L., you usually lose,” said Allen Sanderson, an economist at the University of Chicago, who added that while the draft helped market the city, it did not provide many economic benefits.

Wait, does that mean the City of Chicago got hosed by the NFL? One of the largest corporations on the planet – a nonprofit corporation even, for some crazy reason – needed a cash-strapped city’s funds to host an event that benefits only the NFL? /shakes fist at Rahm Emanuel  Mayor 1%

Written by Seth Anderson

May 4th, 2015 at 7:38 am

JPMorgan Chase Seeks Corporate Welfare to Build New HQ in Manhattan

without comments

Where all hopes sank
Where all hopes sank

I’ve heard of food deserts, perhaps New York City has a bank desert here? Why else would taxpayers fund real estate for one of the biggest, wealthiest banks on the planet? Well, other than the obvious reason, corruption. Sweet, sweet corporate welfare, it’s what makes the business world go ‘round…

City and state officials are negotiating with JPMorgan Chase over a potential deal in which the nation’s largest bank would build a vast $6.5 billion corporate campus with two high-rise towers in the new commercial district on the Far West Side of Manhattan.

The talks, which involve one of the largest real estate complexes for a single company in New York City history and a large package of incentives for Chase, have reached a feverish state after nearly falling apart this week.

The negotiations are so delicate that few people are willing to discuss them publicly for fear of alienating one side or another.

But a deal with the bank poses political risks for both the state and the city. Chase had initially sought, by one account, more than $1 billion in concessions from the city and the state while it continues to pare its payroll in the city. According to executives and officials, Chase wants to build the two towers — whose total space would be the equivalent of about two Empire State Buildings — at Hudson Yards on the north side of 33rd Street, between 10th and 11th Avenues. They would become home to 16,000 employees.

(click here to continue reading JPMorgan Chase Seeks Incentives to Build New Headquarters in Manhattan – NYTimes.com.)

JP Morgan Chase Blues
JP Morgan Chase Blues

and additional evidence that Chase must have explicit photos of Governor Andrew Cuomo and NYC Mayor Bill de Blasio in compromising positions, possibly with each other,  on a bed of lobbyist dollars while Jamie Dimon watches:

As is often the case in these kinds of deals, the bank drew up a lengthy list of possible concessions. Chase wanted to cut the mortgage recording tax, the transfer tax and sales taxes on construction materials. It also sought job-training grants, low-cost power from the state, an underground passageway between the two buildings that would require alterations to the newly built No. 7 subway station and financial help with reinforcing the foundation.

The neighborhood, formerly part of Hell’s Kitchen, was rezoned eight years ago for high-rise development by then-Mayor Michael R. Bloomberg. The rezoning included tax breaks and other incentives intended to encourage new construction.

City officials, who estimated that there are already $600 million in tax breaks and other incentives associated with the two sites, have been reluctant to sweeten the deal for Chase.

The Bloomberg administration issued $3 billion in bonds to pay for parks, a new tree-lined boulevard and an extension of the No. 7 subway line from Times Square to the spot where Chase wants to build the new towers.

Officials at the time had assured skeptics that development fees and payments in lieu of taxes from new towers would cover the debt payments. But development has been slower than anticipated, prompting the city to take more than $130 million from the city budget to make the annual debt payments.

Chase has been eager to reduce its costs in New York and move technical and operational employees to lower-cost locations in Delaware, New Jersey and elsewhere.

Austerity for thee, not for me…

How about instead of giving JPMorgan Chase the $600,000,000 -$1,000,000,000 it is asking for, instead New York gives Chase employees an equal amount in tax credits? Sales tax relief, income tax relief, whatever, but only for the employees who make less than $100,000 a year? Sure they’d all have to file 1040 returns, but seems like a better boost to New York’s economy than doling out government cheese to a filthy rich bank.

Written by Seth Anderson

October 17th, 2014 at 8:55 am

Durbin bill to target corporate inversions

without comments

Financial Blues Brothers
Financial Blues Brothers

As we mentioned, the anti-moocher bill is finally going to be announced by Senator Durbin, though the odds of it passing through the House are slim, unfortunately…

Sen. Dick Durbin said he and other Democrats today will unveil a bill aimed at curbing corporate tax inversions. No federal contracts would go to businesses that engage in corporate inversions (moving headquarters overseas to lower tax bills), the Illinois Democrat said.

The measure is called the No Federal Contracts for Corporate Deserters Act.

The bill would mean no federal contracts would go to businesses that incorporate overseas, are at least 50 percent owned by U.S. shareholders and do not have substantial business opportunities in the foreign country in which they are incorporating. The law now defines a company as being “inverted” if it is at least 80 percent owned by U.S. shareholders after it reincorporates overseas, according to Durbin.

Drugmaker AbbVie of North Chicago is among the corporations that recently have announced they are “moving their mailbox overseas to avoid paying their fair share of taxes,” according to a statement from Durbin and the other Democrats. Deerfield-based Walgreen Co. also is considering such a move.

The others legislators involved are Sen. Carl Levin of Michigan and Reps. Rosa DeLauro of Connecticut and Lloyd Doggett of Texas, who are to appear today with Durbin at the news conference.

The White House estimates that nearly $20 billion in corporate taxes could be lost over the next 10 years because of the corporate merger deals known as inversions.

 

(click here to continue reading Durbin bill to target corporate inversions – chicagotribune.com.)

Written by Seth Anderson

July 29th, 2014 at 5:34 pm

Posted in Business,politics

Tagged with ,

Triumph of Crony Capitalism: Export-Import Bank to be Renewed (probably)

without comments

  Presidential Towers with a Benjamin

Presidential Benjamins

We’ve mentioned the Ex-Im Bank before, at least once, with my solution being to limit tax-payer subsidized loans to businesses who have annual gross income less than $1,000,000, with the thought that perhaps mega-corporations like Boeing and GE could get loans on their own, without involving the Ex-Im Bank. Unfortunately, Corporate Democrats like Senator Chuck Schumer are as happy with the idea of crony capitalism as his counterparts among the Republicans, and it looks like the bank is going to continue business as usual. Money triumphs over common sense, again…

The U.S. Congress probably will reauthorize the Export-Import Bank before its charter expires in two months, adding tools to crack down on misconduct by employees, a Republican House committee chairman said.

“It’s an important agency, but it clearly has corruption problems,” House Oversight and Government Reform Committee Darrell Issa of California said yesterday in an interview on Bloomberg Television.

The 80-year-old bank is facing its toughest test as it seeks reauthorization before its financing powers end Sept. 30. Manufacturers such as Boeing Corp. as well as Wall Street banks back the lender, while the Republican-leaning Heritage Foundation and the Club for Growth, oppose the bank as “crony capitalism.”

(click here to continue reading Export-Import Bank to Win Renewal, With Changes, Republican Says – Bloomberg.)

Golden Plowshares
Golden Plowshares

David Sirota writes:

In politics, as the old saying goes, there are no permanent friends or permanent enemies – there are only permanent interests. Few policy debates prove that truism as well as the one now brewing over the Export-Import Bank — a government agency providing taxpayer subsidized loans to multinational corporations.

This tale starts 15 years ago when my old boss, U.S. Rep. Bernie Sanders, I-VT, was trying to construct a left-right coalition to reform the bank. While a few libertarians were willing to voice free-market criticism of the bank, the impetus for reform was primarily among Democrats and the left. Indeed, Sanders’ failed 2002 amendment proposing to restrict the bank’s subsidies garnered only 22 Republican votes but had 111 Democratic backers — mostly progressive legislators who, in the words of Sanders, saw the Ex-Im Bank program as “one of the most egregious forms of corporate welfare.”    

…By 2008, the progressive-themed criticism of the bank had become so central to Democrats’ agenda that Barack Obama used a presidential campaign speech in 2008 to lambast the bank as “little more than a fund for corporate welfare.”

Fast forward to the last few years. In 2012, Democrats rammed a bill reauthorizing the bank through the Senate, and Obama held a public ceremony to sign the reauthorization bill into law. At the same time, Republicans provided most of the congressional votes against the bank. And now, in the last few weeks, the GOP’s new House majority leader is threatening to block the next authorization bill and thus completely shut the bank down.

This tale is not just another “I was for it before I was against” anecdote. It is also a bigger parable providing a two-pronged lesson: Partisan politics can abruptly shift; yet money politics almost never changes.

(click here to continue reading Corporate Welfare’s Quiet Enablers: How Democrats Pander to Big Business | Alternet.)

More Spare Change
More Spare Change

A little back-story from a David Dayen report in Salon:

But pre-Internet liberals might want to get out their back issues of the Nation and Mother Jones at this point to jog their memory, for they will see article after article condemning the 80-year-old institution as a slush fund that allows the government to fund a series of nasty activities. Here’s one from 1981 (“The Ex-Im helps sell nuclear reactors to dictatorships like the Philippines”). Here’s another from 1992, about the Reagan administration using Ex-Im to funnel loans to Saddam Hussein’s Iraq during their war with Iran. Even more recently, in 2011, Mother Jones reported on how Ex-Im loan guarantees helped build one of the largest coal plants in the world, in South Africa. (Ex-Im subsequently announced it would stop facilitating coal plant production – but only in December of last year.)

Ex-Im wasn’t just a minor annoyance, but a lefty cause célébre. Here’s Sen. Bernie Sanders, back when he served in the House, eviscerating Ex-Im on the floor in 2002, when it came up for reauthorization then. Sanders asked why American taxpayers would provide “huge subsidies and loans to the largest multinational corporations in the world, who pay their CEOs huge salaries … and companies take this money from the taxpayers and say, thank you very much, and oh by the way, we are laying you off because we are going to China and hiring somebody at 20 cents an hour.”

Sanders crafted bipartisan legislation to reform Ex-Im to better protect manufacturing workers, but the bill’s markup got canceled at the last minute. “My suspicion is that the moneyed interests who like the Export-Import Bank as it is right now sent down the word from the top that that markup never take place,” he told his House colleagues.

Back then, liberals highlighted how Enron, the failed energy giant, benefited from $675 million in Ex-Im loans. In 2002, Sanders also pointed out that Ex-Im gave an $18 million loan to a Chinese steel mill, which was later on accused of dumping steel into U.S. markets and hurting U.S. workers. And it was common just a decade or so ago for lefties to call Ex-Im the “Bank of Boeing,” because close to 60 percent of all Ex-Im loans facilitated their aircraft sales. Sanders in particular pointed out that Ex-Im aid for a Boeing sale to the Chinese military ended up displacing workers, as some manufacturing for the aircraft moved from Wichita to China. “The Export-Import Bank is helping General Electric ship jobs to Mexico … helping AT&T ship jobs to China. And on and on it goes,” Sanders concluded.

And Sanders certainly did not believe that financing for multinational trade deals would dry up without Ex-Im. He questioned the head of the bank in 2004, asking, “General Electric, which itself is one of the largest financial institutions in America, cannot get loans anyplace else but from the taxpayers and the workers of America? Are you going to tell me with a straight face that GE is a struggling small business, a minority business in the barrio of New York, and they just cannot find financing?”

(click here to continue reading Wingnuts and liberals’ bizarre role reversal: Why Export-Import Bank politics are so perverse – Salon.com.)

Stay tuned, Congress is about to go on recess until September, I doubt this will be settled until then, at the earliest…

Written by Seth Anderson

July 29th, 2014 at 8:51 am

Posted in Business,politics

Tagged with

Sleazy Walgreen considers headquarters move

without comments

Walgreens Coming Soon
Walgreens Leaving Soon

As we’ve discussed previously, we don’t know how this is considered acceptable behavior. Are the shareholder pressures on Walgreen Co. really so intense that the board would consider this drastic move to shave a few pennies off of their operating costs? Really? Maybe they should look to fire management, and find more competent oversight. Oh wait, Walgreen Co. CEO Greg Wasson was paid $13,700,000 last year. How about returning some of that to shareholders instead? Not to mention, per Walgreens “Net earnings for fiscal 2013 ended Aug. 31 determined in accordance with GAAP were $2.5 billion”. I guess that’s not enough. More, more, more…

The nation’s largest drugstore chain is considering a move that would allow it to significantly cut its tax bill and increase profits. But it’s being painted by critics as un-American for looking to make money for shareholders through financial engineering at the expense of the communities that it grew up in. Walgreen is considering a so-called corporate tax inversion, in which an American company is able to incorporate abroad by acquiring a foreign company. The buyer, in effect, becomes a subsidiary of a foreign parent.

The average person who pays taxes cannot take advantage of the tax loopholes exploited by corporations, and they don’t think it’s fair, said Klaus Weber, associate professor of management and organizations at Northwestern University’s Kellogg School of Management.

“I do think people now more than before care because of rising issues of income inequality and justice and the fact that large companies have come under more scrutiny,” Weber said. “People expect corporations to fulfill their citizen duties as taxpayers like everyone else.”

While several U.S. companies have moved to lower-tax countries since 2012, Walgreen has caught the attention of taxpayer groups and unions that have criticized the potential tax maneuver. They have blasted Walgreen for contemplating fleeing the United States even though it benefits from government insurance programs. Nearly one-quarter of Walgreen’s $72 billion in sales in its last fiscal year came from Medicaid and Medicare, according to a report by Americans for Tax Fairness and Change to Win Retail Initiatives, a union-backed group.

“It is unconscionable that Walgreen is considering this tax dodge — especially in light of the billions of dollars it receives from U.S. taxpayers every year,” Nell Geiser, associate director of Change to Win Retail Initiatives, said in a statement. “Walgreen should show its commitment to our communities and our country by staying an American company.”

(click here to continue reading Walgreen considers headquarters move – chicagotribune.com.)

Hit the Jackpot
Hit the Jackpot

Walgreen Co. is busily calculating the cost of moving corporate infrastructure, relocating executives and staff, and the very real risk of losing their Medicaid/Medicare cash cow, not to mention the also very real risk of consumer boycott to save a few percentage points of tax revenue. Sleazy, no? And ironic, since Medicaid and Medicare is responsible for about 21% of our national budget. Why should Walgreen’s get any of taxpayer money for it when they refuse to pay in?

In honor of Tax Day
Things Walgreens Is Opposed To

Would shareholders care if Walgreen Co. was kicked out the the S&P 500? Probably, but Walgreens executives will get handsomely paid either way.

[The CtW Investment Group] said an inversion could hurt Walgreen’s stock price.

“Reincorporation carries risk of removal from the S.&P. 500 and other stock indices,” it said, citing the examples of Ace and Transocean, which were removed from the index after they moved to Switzerland. It added that some investors like big pension funds could be required to sell shares of the company if it were not included in the S.&P. 500-stock index.

If Walgreen reincorporated in Switzerland, where Alliance Boots is based, the influence of shareholders could be diminished, CtW said. Swiss law gives shareholders less protection, CtW said, making it harder for investors to seek remedies through courts in the event of fraud or a dereliction of board duties.

CtW also said it was sensitive to the brewing political debate about inversions. In recent months, several senators and President Obama have proposed legislation that would curtail the practice. No new laws are yet in place, but there is a belief on Wall Street that the window for such deals could close soon.

“In addition to the concerns outlined above, we fear that there could be political and reputational risks following an inversion, which would pose a clear contradiction with Walgreen’s quintessentially American brand,” CtW wrote. “Accordingly, we strongly urge you to end the controversy over Walgreen’s potential

(click here to continue reading Walgreen Shareholder Opposes Potential Deal to Reincorporate Abroad – NYTimes.com.)

Senator Dick Durbin is troubled by this cowardly plan as well:

As Walgreen Co, the largest U.S. drugstore chain, edged closer to potentially moving its tax home base abroad, the senior U.S. senator from its home state said on Wednesday that he hoped the company would not take such a step.

Illinois Democrat Richard Durbin told Reuters in an interview that he spoke with a Walgreen lobbyist on Tuesday. “I told him I hope that the rumor’s not true,” Durbin said.

Durbin, the Senate’s second-highest ranking Democrat, said Walgreen, now based in a Chicago suburb, would be ill-advised to pursue an “inversion” deal with Switzerland’s Alliance Boots Holding Ltd.

“Because of their national reach, they are a uniquely American company, and I think it would really hurt their image if they decided to give up on this country and to head overseas to make a couple extra dollars,” he said.

(click here to continue reading Exclusive: U.S. senator warns as Walgreen weighs overseas tax deal | Reuters.)

When Thinking Leads To The Unthinkable
When Thinking Leads To The Unthinkable

and despite the Patriot Employer Tax Credit Act bill having a slim chance of passing through the reactionaries in the US House, Sen. Durbin is at least trying:

Sen. Richard Durbin said Monday he will introduce legislation this week that would close tax loopholes for corporations that take jobs out of the country.

Durbin announced the “Patriot Employer Tax Credit Act” at Wheatland Tube in the Back of the Yards neighborhood. He plans to introduce the measure Thursday, a spokeswoman said.

The proposal would give tax credits to companies “that provide fair wages and good benefits to workers while closing a loophole that allows corporations to claim tax savings for activities such as building a manufacturing plant overseas,” according to a news release from Durbin’s office.

To qualify for the credits, a company must maintain its corporate headquarters in the U.S., maintain the same number or increase the number of U.S. workers compared with the number overseas and provide health insurance benefits that comply with the Affordable Care Act.

(click here to continue reading Durbin bill would close tax loopholes for corporations sending jobs overseas – chicagotribune.com.)

Written by Seth Anderson

June 29th, 2014 at 6:40 pm

Boeing falls most since April After Cantor loss

without comments

Double Rainbow Over Boeing
Double Rainbow Over Boeing

The most amusing headline we read the day after Eric Cantor (Smug R) lost his primary to the Tea Bagger, and Ayn Randian acolyte, David Brat, was this one. Poor, poor Boeing, lost one of their sugar daddies…

Boeing Co. (BA) fell the most in two months as U.S. House Majority Leader Eric Cantor’s defeat in a primary election threatens congressional reauthorization of low-cost lending that benefits the world’s largest planemaker.

Keeping alive the Export-Import Bank will be an “even more high-profile/challenging fight,” Chris Krueger, a senior policy analyst for Guggenheim Securities LLC, said today by e-mail. Boeing was the “biggest loser” besides Cantor in the Virginia Republican’s surprise loss yesterday, Krueger wrote.

Ex-Im arranges financing that helps foreign airlines buy jets, a service that Boeing said last month would support $10 billion of 2014 sales. As Congress debates reauthorization, House Financial Services Committee Chairman Jeb Hensarling of Texas is being promoted as a possible Cantor successor. He has said the U.S. should “exit the Ex-Im.”

(click here to continue reading Boeing Tumbles as Cantor Loss Clouds Ex-Im Bank’s Future – Bloomberg.)

Boeing - El Segundo
Boeing – El Segundo

So what exactly is the Export-Import Bank? The Wikipedia entry:

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government. It was established in 1934 by an executive order, and made an independent agency in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered for a three-year term in 2012 which will expire in September 2014. Its Charter spells out the Bank’s authorities and limitations. Among them is the principle that Ex-Im Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal.

(click here to continue reading Export-Import Bank of the United States – Wikipedia, the free encyclopedia.)

Golden Plowshares
Golden Plowshares

Corporate welfare, in other words. Propping up the bottom line of the military-industrial complex, and other crony capital chores. Sure, after World War 2, the bank was perhaps justifiable, the Marshall Plan and all that. But in today’s economy? Why does Boeing, GE, Halliburton or ExxonMobil need special low-interest loans subsidized by US taxpayers, loans that are not available to the rest of the business world? Especially when so much of what the bank subsidizes is bad for the planet. 

Like:

The bank’s environmental policy is a disappointment because it would allow an increase in spending on coal and other technologies harmful to the environment, said Steve Kretzmann, who runs Washington-based Oil Change International, which seeks to curb government aid to fossil-fuel companies.

“It makes a mockery of the Obama administration’s supposed commitment to phase out fossil-fuel subsidies,” Kretzmann said in an interview.

The project in Papua New Guinea led by Irving, Texas-based Exxon has become a particular point of contention.

The pipeline’s construction will destroy pristine tropical forests, PacificEnvironment’s Norlen said in a submission to the lender in September.

Exxon “is the most profitable corporation on the planet,” Kretzmann said. “This is the last place that taxpayer support should be going.”

(click here to continue reading Obama’s Trade Goal Fights His Clean-Energy Plan (Update4) – Bloomberg.)

and:

President Barack Obama’s goals of boosting U.S. exports and combating climate change are colliding as the U.S. Export-Import Bank expands financing for oil, gas, mining and power-plant projects.

Bank-supported ventures approved in the year ended Sept. 30 will emit an estimated 17.9 million metric tons of carbon annually, more than triple the previous year and the most since the lender started releasing data in 2001, according to its annual reports. Among companies aided were General Electric Co. and Petroleos Mexicanos, Mexico’s state-owned oil business.

“Ex-Im is on a fossil-fuel binge,” said Doug Norlen, policy director at PacificEnvironment, an environmental advocacy group in San Francisco.

You Can't Bribe No one
You Can’t Bribe No one

We’re not alone in wondering why in our current economic climate, this corporate welfare bank continues to exist.

For instance, from those hippies at Forbes:

Nothing brings out the well-tailored lobbyists in Washington quite like a threat to corporate welfare.  With the Export-Import Bank’s legal authorization set to run out this year, the Chamber of Commerce recently led a Big Business march on Capitol Hill to protect what is known as Boeing’s Bank.  Over the last eight decades ExIm has provided over a half trillion dollars in credit, mostly to corporate titans.  Congress should close the Bank.

ExIm was created in 1934 to underwrite trade with the Soviet Union.  The agency piously claims not to provide subsidies since it charges fees and interest, but it exists only to offer business a better credit deal than is available in the marketplace.  The Bank uses its ability to borrow at government rates to provide loans, loan guarantees, working capital guarantees, and loan insurance.

The result is a bad deal for the rest of us.  For instance, ExIm is not free, as claimed.  Recently made self-financing, the agency has returned $1.6 billion to the Treasury since 2008.  However, economists Jason Delisle and Christopher Papagianis warned that the Bank’s “profits are almost surely an accounting illusion” because “the government’s official accounting rules effectively force budget analysts to understate the cost of loan programs like those managed by the Ex-Im Bank.”

In particular, the price of market risk is not included, even though doing so, explained the Congressional Budget Office, would provide “a more comprehensive measure of federal costs.”  Delisle and Papagianis figured ExIm’s real price to exceed $200 million annually.  Indeed, both the Government Accountability Office and ExIm Inspector General raised questions about the accuracy of the agency’s risk modeling.

Federal Reserve economist John H. Boyd took another approach, explaining:  “For an economic profit—that is, a real benefit to taxpayers—Eximbank’s income must exceed its recorded expenses plus its owners’ opportunity cost, a payment to taxpayers for investing their funds in this agency rather than somewhere else.”  If ExIm was private, he added, “one must suspect that its owners would have pulled out long ago in favor of a truly profitable enterprise.”  He figured the Bank’s real cost averaged around $200 million a year in the late 1970s but had increased to between $521 million and $653 million by 1980.  Given the recent explosion in Bank lending the corresponding expense today could be much higher.

(click here to continue reading Close the Export-Import Bank: Cut Federal Liabilities, Kill Corporate Welfare, Promote Free Trade – Forbes.)

Written by Seth Anderson

June 13th, 2014 at 10:42 am

Patriotism and Taxes: Walgreens Considering Fleeing US

without comments

Walgreens Coming Soon

Walgreen Co. is allegedly considering relocating its headquarters from Deerfield, IL to somewhere in Europe, probably Switzerland, perhaps Paris to avoid contributing extra dimes to our national good. Shareholders are more important than schools and roads, never forget.

In a twist on economic globalization less obvious than moving factories overseas, a small but growing number of corporations have relocated headquarters to Europe to escape the 35 percent tax on U.S. profits, the highest in the developing world.

Walgreen Co., the nation’s largest drugstore chain, is under pressure from some shareholders to move its headquarters to Europe, where it owns nearly half of Swiss-based pharmacy giant Alliance Boots.

Deerfield-based Walgreen has called Illinois home for all its 113 years.

Though a move would make financial sense for Walgreen and its investors, it’s an executive decision fraught with political risk for a company as high profile as the pharmacy chain, analysts said Monday after news leaked that Walgreen and investors discussed the possibility.

Walgreen plays an integral role in the U.S. health care system, dispensing drugs to millions of consumers through its more than 8,000 stores. A significant portion of its $72 billion in annual sales comes from Medicare, the federal government’s insurance program for the elderly.

 

(click here to continue reading Investor group pressures Walgreens to move HQ to Europe – Chicago Tribune.)

Tax Refund Received
Tax Refund Received

Not mentioned in this Chicago Tribune (Republican) article is that most U.S. corporations pay much, much less than the 35% corporate tax rate often cited. Loopholes, deductions add up to reduce corporate taxes in a way that an individual tax filer can never hope to replicate.

The biggest, most profitable American companies paid only a fraction of the taxes they would owe under the official corporate rate, according to a study released on Monday by the Government Accountability Office.

Using allowed deductions and legal loopholes, large corporations enjoyed a 12.6 percent tax rate far below the 35 percent tax that is the statutory rate imposed by the federal government on corporate profits.

The report found that even when foreign, state, and local taxes were included, the tax rate of large companies rose only to 16.9 percent of total income, still well below the official 35 percent.

“Some U.S. multinational corporations like to complain about the U.S. 35 percent statutory tax rate, but what they don’t like to admit is that hardly any of them pay anything close to it,” Mr. Levin said in a statement. “The big gap between the U.S. statutory tax rate and what large, profitable U.S. corporations actually pay is due in large part to the unjustified loopholes and gimmicks that riddle our tax code.”

(click here to continue reading Big Companies Paid a Fraction of Corporate Tax Rate – NYTimes.com.)

Three Thousand Walgreens
Three Thousand Walgreens

Now, if Walgreen Co. pays 35% in tax, and the rest of their competitors pay only 12.6% or similar, than perhaps Walgreen’s should hire a few accountants before moving their entire operations to socialist1 Europe. I’d hazard a guess that Walgreen’s has as good of accountants and tax lawyers as any other U.S. corporation, and thus is not paying 35% of its income in tax. 

Also, I don’t see how Walgreen Co. could depend upon maintaining its Medicare cash-cow if it was a non-US corporation. That would not play well during election season.

Footnotes:
  1. kidding, kidding, of course []

Written by Seth Anderson

April 15th, 2014 at 9:27 am

Posted in Business

Tagged with , ,

ADM to move headquarters to Chicago after all, sans tax break

without comments

I Am A Lonely Visitor
I Am A Lonely Visitor

We’ve been following this story for a while, so an update from Phil Rosenthal and Ray Long:

Archer Daniels Midland, unable to secure the special tax incentives it sought from Illinois legislators, nonetheless announced Wednesday that it will go forward with its plan to move its world headquarters to Chicago from Decatur, Ill.

The agriculture giant said it plans to locate 50 to 75 executives in Chicago to a site that has not yet been selected. That’s down from the 100 jobs the company originally cited in its bid to win Springfield approval for special payroll tax incentives worth up to $30 million over 20 years.

“While we considered other global hubs, Chicago emerged as the best location to provide efficient access to global markets while maintaining our close connections with U.S. farmers, customers and operations,” said ADM Chairman and CEO Patricia Woertz said in a statement Wednesday morning. “Chicago also provides an environment where we can attract and retain employees with diverse skills, and where their family members can find ample career opportunities.”

The politicians who opposed a cash-strapped state giving a $1.5 million annual tax break to a company with a market cap of more than $27 billion can claim they held their ground. But absent the incentives package, ADM would not have to make assurances about ongoing staffing levels.

(click here to continue reading ADM to move headquarters to Chicago – chicagotribune.com.)

Like I said before, talented executives want to live in a place that’s interesting, in a city that has culture, restaurants, and so on. If free money is offered, of course corporations are going to take it, but without it? They would still rather live somewhere where nightlife consists of more than just Wednesday night bingo.

Your Allusion Was Too Subtle
Your Allusion Was Too Subtle

It appears that ADM has a robust enough business that they don’t need corporate welfare to stay in business after all, in contrast to the barely above-water Office Depot/OfficeMax corporation, which decided to keep its HQ in Florida. 

Office Depot said Tuesday it has chosen Boca Raton, Fla. for its new headquarters over Naperville.

Office Depot completed its merger with Naperville-based OfficeMax last month, but the pair hadn’t yet announced where the combined company would be based.

The companies asked for tax breaks from both states. Illinois lawmakers adjourned last week before making a decision.

(click here to continue reading Office Depot picks Florida over Illinois for new headquarters – Chicago Tribune.)

A cynic might note that Office Depot was the purchaser of OfficeMax, and Office Depot’s HQ was already located in Florida, thus any discussion of moving to Illinois was mostly about leverage to shake down the State of Florida for tax breaks. Also, for what its worth, Florida doesn’t have a state income tax, a fact overpaid executives are probably well aware of.

One last point, ADM might have negotiated a back-room deal with Illinois politicians – the tax incentives might miraculously show up during next year’s legislative session, we’ll have to continue to pay attention.

Written by Seth Anderson

December 18th, 2013 at 10:34 am

Companies Say Goodbye to the Dead Zones of the Suburbs

without comments

Deeper Than Your Heart Allows
Deeper Than Your Heart Allows

I’ve long suspected this to be true:

When Motorola Mobility lined up a Silicon Valley candidate a few months ago for a VP-level role, the phone maker was hopeful he’d accept. After all, the company offered the chance to develop products at a subsidiary of Google Inc. 

The engineer declined. His reason: the prospect of relocating to Libertyville, Ill., about 35 miles from downtown Chicago, said Scott Sullivan, Motorola’s head of human resources.

Mr. Sullivan expects recruiting to get a lot easier next February when the company moves into a new space in the storied Merchandise Mart building in downtown Chicago.

Motorola will join United Continental Holdings Inc., Hillshire Brands Co. —the successor to Sara Lee Corp.— and other corporate giants abandoning vast suburban campuses for urban offices nearer to the young, educated and hyper-connected workers who will lead their businesses into the digital age. Archer Daniels Midland Co. recently said it would move its headquarters from Decatur, Ill., and in the Bay Area, startups like Pinterest Inc. are departing Silicon Valley for San Francisco.

After decades of big businesses leaving the city for the suburbs, U.S. firms have begun a new era of corporate urbanism. Nearly 200 Fortune 500 companies are currently headquartered in the top 50 cities. Many others are staying put in the suburbs but opening high-profile satellite offices in nearby cities, sometimes aided by tax breaks and a recession that tempered downtown rents. And upstart companies are following suit, according to urban planners. The bottom line: companies are under pressure to establish an urban presence that projects an image of dynamism and innovation.

(click here to continue reading Companies Say Goodbye to the ‘Burbs – WSJ.com.)

Apollo Visits the New Google HQ
Apollo Visits the New Google HQ

which makes it more puzzling why governments (state, city both) dangle tax breaks to encourage corporations to relocate. The truth is the executives much rather would live in vibrant cities, not B.F.E. rural Alabama for the most part. The employees would rather live in a place that is fun to live in, a place with culture, award-winning restaurants, recreation, and even sports teams. As a totally random example, Sinead O’Connor came through Chicago, playing for a few days at the City Winery. Do you think she’s playing in Gulfport, Mississippi? Or Decatur, IL? So why does ADM, for instance, stamp its feet for a tax break from a state that’s already operating at a deficit? Happily, the Illinois House adjourned before granting payola graft to ADM, though the IL Senate passed their version of this travesty, right before cutting pensions for teachers.

Two bills that would grant special tax breaks for three companies have stalled until state lawmakers return here in the spring. The bills, aimed at allowing Archer Daniels Midland, Office Depot, and Univar to retain withholding taxes that would go to the state, passed the Senate during a one-day special session Tuesday. But the House adjourned, stalling the bills.

All three companies have said they are considering proposals from other states.

“We appreciate the support of the senators who voted for the bill, especially the leadership of Sen. (Andy) Manar. Given that the House did not act, we will review our options. We expect to make an announcement soon,” Jackie Anderson, an ADM spokeswoman, said in a statement.

…Office Depot and Univar declined to comment.

Had the bills been approved, the incentives would have cost the state an estimated $88 million.

Unions, which opposed the plan to deal with worker pensions, criticized the incentives bills.

“At a time when Illinois is a chronic deadbeat and critical resources such as education, public safety and healthcare remain woefully under-funded, our elected representatives today voted to sink the state further into red ink by absolving some of its richest corporations from paying their fair share in taxes,” Keith Kelleher, president of SEIU Healthcare Illinois, Indiana, Missouri and Kansas, said in a statement.

Office Depot, chemical distributor Univar and agriculture giant ADM are among at least a half-dozen companies seeking special state legislation to keep their employees’ tax withholdings instead of forwarding them to the state. The companies want the special breaks because they have years in which they have little or no state corporate tax liability and can’t take advantage of state tax breaks awarded to spur economic development.

 

(click here to continue reading Tax breaks for Office Depot, Univar inch closer to approval – chicagotribune.com.)

Yeah, I’d rather Office Depot and A.D.M. have strong enough businesses that they could survive without resorting to corporate welfare…

Written by Seth Anderson

December 4th, 2013 at 10:04 pm

Posted in Business

Tagged with , , ,

Corporate Welfare For ADM, Office Depot, Univarc

without comments

ADM butt-crack
ADM butt-crack

Corporate welfare is an ugly practice. I’ve long been opposed to the sports stadium boondoggle, where the public pays for an expensive stadium, instead of the billionaires who own the team, but at least with those sorts of deals, the area gets to root for laundry with the city name on it. Some form of civic pride, some vague benefit. Corporate vampires like ADM draining the nearly bloodless corpse of the state government is much worse. It is as if Illinois was flush with cash – it isn’t – and a backwards state that no business wants to be located in – it isn’t. Notice too how Greg Webb of ADM won’t even guarantee that ADM will stay until the ink is dry on the bill.

So ADM basically says, “Give us money you don’t have, and maybe you’ll get something in return come election time. Or not”. What a crock.

State lawmakers Wednesday took a step closer to granting special incentives to companies seeking thousands of dollars per job created or retained in Illinois.

Agricultural giant Archer Daniels Midland Co. is seeking $5,000 per job per year, chemical distributor Univar Inc. almost $3,000 and OfficeMax, which became Office Depot after its merger this week, $1,570.

All the companies are seeking to collect their employees’ tax withholdings instead of forwarding them to the state. The reason for the requests is that companies have years in which they have little or no state tax obligation and can’t take advantage of incentives negotiated with the state.

The ADM measure would tie incentives to 300 jobs: moving 100 jobs from Decatur, where it’s based, to the company’s new global headquarters, and creating 100 jobs at the headquarters and 100 jobs in Decatur. The company would also be required to fill 100 positions annually in Decatur for five years, including jobs created because of retirements. The incentive will total about $1.5 million a year for 15 to 20 years, a company spokeswoman said.

Sen. David Luechtefeld, of downstate Okawville, asked during a Senate committee hearing whether ADM would guarantee it would keep its headquarters in the state if the measure is approved.

“I don’t know about the guarantee part,” said Greg Webb, ADM’s vice president of government relations. He later added: “I’m going to tell you that we have a preference for Illinois.”

(click here to continue reading Lawmakers closer to granting special incentives to companies creating or retaining jobs in Illinois – chicagotribune.com.)

Reliable, ADM In afternoon light
Reliable, ADM In afternoon light

The corporate vampires have such a low tax burden, despite their profitability, they cannot “take advantage of incentives negotiated with the state”. Right, here is their great idea. Create even more incentives negotiated with the state, with a half-hearted promise to keep the headquarters in Chicago. There is no language in the bill that even requires ADM to create the jobs the $30,000,000 is allegedly buying. In other words, if the bill passes, and in 2014, ADM decided to move to Mississippi, well then, this was all for nought. 

And then there’s these vampires, playing one area against another:

At the same hearing, Office Depot interim co-CEO Ravi Saligram said a new proposal requiring the company to create 200 jobs in the state, in addition to retaining 2,050, would cost Illinois $53 million over 15 years.

Saligram said the newly merged company is also seeking incentives from Florida before deciding where to locate its new corporate headquarters. Office Depot, which merged with Naperville-based OfficeMax, employs 1,700 at its Boca Raton, Fla., headquarters.

Office Depot already has a multimillion-dollar package of incentives with Florida and Palm Beach County based on job creation.

(click here to continue reading Lawmakers closer to granting special incentives to companies creating or retaining jobs in Illinois – chicagotribune.com.)

Industrial Devolution
Industrial Devolution

and these one:

Separately, House lawmakers Wednesday approved a bill that paves the way for chemical distributor Univar Inc. to receive incentives worth $5 million over 10 years. The Redmond, Wash.-based company is considering moving its headquarters to Downers Grove, said Rep. Michael Zalewski, D-Riverside, the sponsor of the bill.

Zalewski said Univar is different from other companies seeking incentives because it’s considering moving its headquarters to Illinois.

(click here to continue reading Lawmakers closer to granting special incentives to companies creating or retaining jobs in Illinois – chicagotribune.com.)

Whoever came up with this system should be exiled to Somalia. There is exactly zero evidence any of these corporate welfare programs help the state government, in any tangible way. None! or as Rep. Jack Franks of Marengo said:

There is no evidence that this is a good deal for the state.

Written by Seth Anderson

November 7th, 2013 at 8:12 am