Tag: tax

Sleazy Walgreen considers headquarters move

Seth Anderson0 comment

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.)

Sting: My Children Won’t Inherit My Wealth

Seth Anderson0 comment

Iota Eta Sigma
Iota Eta Sigma

Words I didn’t expect to type in the 21st C.E., “Good for Sting!”. If only Sam Walton had been as insistent upon his progeny finding their own way, or Donald Trump’s father…

Sting’s children cannot expect to inherit his multimillion-pound wealth, the rock star has said, joining the ranks of the super-rich who have claimed that passing on their vast fortunes to their offspring could do more harm than good.

The 62-year-old musician, who is estimated to be worth £180m and has three sons and three daughters, said he did not want “to leave them trust funds that are albatrosses round their necks”.

“They have to work,” he told the Mail on Sunday’s Event magazine . “All my kids know that and they rarely ask me for anything, which I appreciate. Obviously, if they were in trouble I would help them, but I’ve never really had to do that. They have this work ethic that makes them want to succeed on their own merit.”

Sting insisted there would in fact not be a huge fortune left for his children, who are aged between 18 and 37.

“I told them there won’t be much money left because we are spending it,” he said. “We have a lot of commitments. What comes in we spend, and there isn’t much left.”

(click here to continue reading Sting: My Children Won’t Inherit My Wealth – Business Insider.)

I Will Ransom Them From The Power of the Grave
I Will Ransom Them From The Power of the Grave

Speaking of estates, a couple years ago, my parents mentioned that they’ve executed their will, splitting their estate three ways between my brother, my sister and me, with my sister getting 34%. We are lucky in that we get along well, and that the amount we are talking about is certainly less than $2,000,000…

Some other wealthy folks of note also doing the right thing:

Bill Gates, the world’s richest man, has said that his children could not expect to inherit the vast majority of his estimated $76bn fortune.

“They won’t have anything like that. They need to have a sense that their own work is meaningful and important,” he has been quoted as saying. “You’ve got to make sure they have a sense of their own ability and what they’re going to go and do.”

Simon Cowell, the music mogul whose son Eric was born earlier this year, has said he will most likely leave his estimated £225 million fortune for charity, explaining: ““I don’t believe in passing on from one generation to another.”

British celebrity chef Nigella Lawson has said she was “determined” that her children should have no financial security as “it ruins people not having to earn money”.

Anita Roddick, the Body Shop founder, left her entire £51m fortune to charity after describing leaving money to one’s own family as “obscene”.

…And John Roberts, the chief executive of white goods retailer ao.com, has said he will not pass his estimated £500m wealth to his children, in order that they could have normal lives and a sense of achievement.

When a Will Divides an Estate, and Also Divides a Family

Seth Anderson0 comment

Don't Outlive Your Money
Don’t Outlive Your Money

More data about the need for estate reform in the US

she requested a copy of the will. It turns out her grandmother, who was suffering from severe Alzheimer’s, had signed a will in September 2012 that reaffirmed a 2007 will that split her assets among her five children, with her son’s share going to his children. Five days later — and a week before she died — the grandmother signed another will that disinherited her son’s children.

…And it raised common competing issues in these cases: Grandma may have had diminished capacity or been swayed by her daughters, he said. “But judges work very hard to protect individual rights to dispose of their property as they wish.”

The bar to overturn a will is high. “The capacity needed to make a will is very low, lower than to enter into a legal contract,” said Adam von Poblitz, head of estate planning for Citi Private Bank. “You could have someone who had dementia, but if they had moments of lucidity they could execute a fully valid will.”

For Kate, it wasn’t only about the money but about how her aunts treated her. “They started calling us greedy from the beginning,” she said.

Disinheriting family members is an extreme step and one that is not even allowed in many countries. John Davis, faculty chairman of the families in business program at Harvard Business School, has studied inheritance laws around the world and found that in most places people have limited discretion over leaving money to heirs.

“Whether it’s sharia in Muslim countries or the Napoleonic Code throughout Europe and parts of Latin America, what you give to your heirs is tightly prescribed,” Mr. Davis said. “Anglo-Saxon countries are the exception to this rule.”

In reality, Mr. Davis said, unequal inheritance is rare even in the United States, though he often advocates for it to be used more, particularly when a family business is involved.

(click here to continue reading When a Will Divides an Estate, and Also Divides a Family – NYTimes.com.)

All too frequently the lawyers are the ones who end up with the bulk of the inheritance, especially in cases where litigation is involved. Not to mention, the estate always seems to be smaller than anticipated by the aggrieved parties…

Big Reasons The Estate Tax Needs to Be Raised to 90 Percent

Seth Anderson0 comment

Of course it buys happiness
Of course it buys happiness

If I was in charge of tax policy, instead of lowering the estate tax as so many rich schmucks are constantly yammering about, I’d raise it to 90% on all estates valued at greater than $2,000,000. Why can’t these parasites make their own fortunes? and even being able to gift 10% of your multi-billion dollar estate is more than enough to live comfortably…

Here are some reasons why. 

For instance:

SC Johnson, the “family” company’s billionaire heir, Samuel Curtis Johnson III, who confessed to repeatedly sexually assaulting his teenage stepdaughter has received an outrageous prison sentence of only four months because the judge, Circuit Justice Eugene Gasiorkiewicz, feels that Johnson’s importance to the community is valued much higher than the dignity of his abused step-daughter. 

…

Affluenza, as it has been dubbed, has struck again. This billionaire has officially plead guilty to mere misdemeanor charges of fourth-degree sexual assault and disorderly conduct instead of receiving the maximum which is felony sexual assault on a minor child. These charges originally stem from 2011. Think Progress reported Johnson’s stepdaughter “initially told police Johnson was ‘a sex addict‘ and touched her inappropriately 15 to 20 times starting when she was 12 years old. She told her mother about the abuse in order to protect her younger sister, and Johnson confessed when the mother confronted him.” Because Johnson’s victim was unwilling to testify in the case, the prosecutors had to make a plea deal with Johnson and his legal team. 

(click here to continue reading – Billionaire Gets 4 MONTHS For Sexually Assaulting 12-Year-Old Because He’s ‘Productive’.)

and

A Delaware man convicted of raping his three-year-old daughter only faced probation after a state Superior Court judge ruled he “will not fare well” in prison.

In her decision, Judge Jan Jurden suggested Robert H. Richards IV would benefit more from treatment. Richards, who was charged with fourth-degree rape in 2009, is an unemployed heir living off his trust fund. The light sentence has only became public as the result of a subsequent lawsuit filed by his ex-wife, which charges that he penetrated his daughter with his fingers while masturbating, and subsequently assaulted his son as well.

Richards is the great grandson of du Pont family patriarch Irenee du Pont, a chemical baron.

According to the lawsuit filed by Richards’ ex-wife, he admitted to assaulting his infant son in addition to his daughter between 2005 and 2007. Richards was initially indicted on two counts of second-degree child rape, felonies that translate to a 10-year mandatory jail sentence per count. He was released on $60,000 bail while awaiting his charges.

(click here to continue reading One Percenter Convicted Of Raping Child Dodges Jail Because He ‘Will Not Fare Well’.)

and

Ethan Couch, the Texas teen whose deadly drunk driving was excused by a lenient judge because of “affluenza,” is serving his time in rehab on mostly taxpayers’ money, RadarOnline reports. According to RadarOnline, it is largely the public who will be responsible for the now 17-year-old’s $438,000-per-year rehab treatment.

“Recently a judge ruled that the teen should be sent to North Texas State Hospital in Vernon. The hospital’s rehab program charges $700 a day, but since it is a partially state-funded institution, Couch’s parents would only be charged $38 per day for their son’s treatment,” Kenneth Webster, a contributor to Breitbart.com, said, according to the news site. “Thanks to taxpayers, Couch’s rehab bill has been dropped from $438,000 annually to only $13,870.”

That seems a small fee for the affluent family, who have been sued for millions of dollars by the families of those killed in the drunk-driving accident, as well as by those injured.

Last year Couch decided to take a drunken joy ride in his pickup truck after a party. He crashed into the car of Breanna Mitchell, whose car had stalled, killing her and three others who were trying to help her. Another teen boy who was in the pickup with him, Sergio Molina, was thrown from the vehicle. He landed on his head and was left paralyzed, with only the ability to smile and blink. Molina’s family settled with Couch’s family in early May.

(click here to continue reading Report: Taxpayers Footing Rehab Bill for ‘Affluenza’ Teen – The Root.)

Walmart Neighborhood Market
Walmart Neighborhood Market

and then there are these stains:

As it turns out, the first generation led by patriarch Sam Walton put $4.7 billion into the foundation, a figure that represents 98.8 percent of all family donations over the past 23 years. The six Scrooges of the second Walton generation ponied up only 1.2 percent. Alice Walton, one of the faces of Mitt Romney’s 2012 SuperPAC, has given zero. With over $2 billion in assets, the Walton Family Foundation distributed $325 million in 2013. Those dollars went overwhelmingly to their stomping grounds in northwest Arkansas, funding environmental improvements, pet education reforms including charters schools and vouchers and, as Forbes reports, “Alice Walton’s stunning Crystal Bridges Museum of American Art.”

…

For starters, for decades the Waltons have relied on a tax dodge that now bears their name to keep billions of dollars from Uncle Sam. The Walton grantor-retained annuity trust, or Walton GRAT, has allowed billionaires like the Walmart heirs and casino mogul and GOP bag man Sheldon Adelson to shield $100 billion from the IRS since 2000. Named after the tactic lawyer Richard Covey, the dodge was developed for Sam Walton: GRATs work by rapidly shifting large volumes of stock into a trust fund that is legally required to return that initial investment after two years. The stocks in the trust gain enough value that when it comes time to repay the initial investment there is a substantial amount of stock left over that can be transferred on to some third party without triggering the gift tax.

(click here to continue reading The Walmart heirs should save Detroit.)

(click here to continue reading The Walmart heirs should save Detroit.)

And more…

In 2013 alone, the Foundation invested $325 million across three key areas: education reform, the environment and the family’s home region of northwest Arkansas. One of the Foundation’s major recipients has been Alice Walton’s stunning Crystal Bridges Museum of American Art, funded to the tune of $1.2 billion.

However, almost none of this largesse is the result of donations from the Waltons themselves, according to a report released on Tuesday by Walmart 1 Percent, a project of union-backed Making Change at Walmart.

Says the study, which can be viewed in full here:

The central finding of this report is simple: Our analysis of 23 years’ worth of the Walton Family Foundation’s tax returns shows that Rob, Jim, Alice and Christy Walton—the second generation Walmart heirs—have contributed almost none of their personal fortune to the foundation which bears their family name.

Specifically:

– Rob and Alice Walton made zero individual contributions to the Foundation during the 23 years we examined;

– Jim Walton made a single personal contribution of $3 million to the Walton Family Foundation, more than 15 years ago;

– Rob, Jim, and Alice Walton and the family holding company they control (Walton Enterprises) have been responsible for only .13% of all contributions to the Walton Family Foundation ($6.4 million);

– Among the second generation Walton heirs, it is the in-law, Christy, who has been responsible for the largest share of contributions to the Foundation;

– The four Walmart heirs and Walton Enterprises combined have been responsible for only 1.2% of all contributions to the Walton Family Foundation.

The combined lifetime contributions of the second generation Walmart heirs and their family holding company to the Walton Family Foundation come to $58.49 million, or:

■■ About .04% of the Waltons’ net worth of $139.9 billion;
■■ About .34% of the estimated $17.1 Billion in Walmart dividends that Rob, Jim, Alice and Christy received during the years we analyzed;
■■ Less than one week’s worth of the Walmart dividends the Waltons will receive this year;
■■ Less than the estimated value of Rob Walton’s collection of vintage sports cars.

The report goes on to detail how the Foundation has been funded over the years, namely by tax-avoiding trusts established with assets provided by the late Sam, Helen and John Walton or their estates. The study found that 99% of the Foundation’s contributions since 2008 have been channeled through 21 Charitable Lead Annuity Trusts. These CLATs, as they’re known, are specifically designed to help ultra-wealthy families avoid estate and gift taxes.

Forget-me-not Social Security
Forget-me-not Social Security

If the rich keep using their wealth and power to take from the rest of us, when will it end? If entitled assholes like the ones mentioned here get their way, and Social Security, Medicare, and other entitlement programs become insolvent because little S.C. Johnson the Third refuses to participate in our democracy, what then? Will a guillotine be required eventually?

GOP Hypocrites Busted For Trying to Add $310 Billion to the Deficit Via Tax Breaks

Seth Anderson0 comment

Dance Now At Every Chance
Dance Now At Every Chance

Tax breaks are sacrosanct, responsible budgets be damned…

The next time a Republican even comes near climbing aboard the deficit cross, you have permission to laugh in their face. The party of paying for things has proposed $310 billion in permanent, unpaid for tax provisions today.

The party of austerity for children, veterans, the elderly, and the sick claimed they were only cutting people off in order to be “Responsible with the Deficit”. This is the same deficit that they told us didn’t matter when they were in charge, but after they fled responsibility in the wake of the 2008 crash as a Democratic President took office to clean up their mess, suddenly the deficit was all Republicans could think about. So sorry about your starving baby, but the DEFICIT.

The DEFICIT is the number one priority, they somberly and relentlessly intoned any time they got near a microphone.

And yet today, Republicans proposed tax provisions without offsets that Ranking Member Sander Levin (D-MI) points out would add “a combined $310 billion to the deficit,” which “represents more than half of the entire federal deficit this year.”

(click here to continue reading GOP Hypocrites Busted For Trying to Add $310 Billion to the Deficit Via Tax Breaks.)

watch the statement yourself…

https://www.youtube.com/watch?v=WBeN3RkaFVk

Patriotism and Taxes: Walgreens Considering Fleeing US

Seth Anderson0 comment

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 [↩]

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

Seth Anderson0 comment

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.

Companies Say Goodbye to the Dead Zones of the Suburbs

Seth Anderson0 comment

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…

Amazon Affiliate Program Back in IL

Seth Anderson0 comment

https://i0.wp.com/farm6.staticflickr.com/5545/11213398444_0b931224a3_z.jpg?resize=640%2C640
Amazon dot com box

We’ve written about the Amazon Affiliate program in Illinois on a few previous occasions. Today I received this email:

Hello,

We’re pleased to announce that the Amazon Associates program is again open to residents of the State of Illinois. We’re now able to re-open the program because the Illinois State Supreme Court recently struck down legislation that had forced Amazon to close the program to residents of Illinois. Amazon strongly supports federal legislation like the Marketplace Fairness Act that’s now pending before Congress, which is the only constitutional way to resolve interstate sales tax collection issues.

Residents of Illinois who would like to participate in the Amazon Associates program can submit an application here:

http://affiliate-program.amazon.com/gp/associates/apply/main.html

Thanks for your past participation in the Amazon Associates program. We hope to see you again soon.

Well that was a big circle around the campfire…

Corporate Welfare For ADM, Office Depot, Univarc

Seth Anderson0 comment

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.

Photo Republished at IRS Pays Billions In Bogus Refunds—But Legit Refunds Still Get Audited – Forbes

eggplant0 comment

Tax Refund Received

My photo was used to illustrate this post

The IRS has had a string of recent failures, but paying out bogus refunds is particularly embarrassing. The IRS knows it is happening, knows which tax credits and refunds are targeted, and still can’t seem to stop it. President Obama even called for a fix back in 2009 in an executive order. The IRS is looking into it. And a new report says there’s no solution in sight. The IRS paid out $132 billion in bogus tax credits over the last decade. The Treasury Inspector General for Tax Administration reports that the IRS is not in compliance with Executive Order 13520 to reduce improper payments. The IRS has had several warnings.…Tax Refund Received (Photo credit: swanksalot)

click here to keep reading :
IRS Pays Billions In Bogus Refunds—But Legit Refunds Still Get Audited – Forbes

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Illinois Roads, Texas Roads

Seth Anderson0 comment

Interstate
Illinois Interstate

There seems to be some sort of metaphor here. Compare and contrast, Illinois vs. Texas…

Illinois increases highway speeds:

Drivers tooling through the Illinois countryside will be able to nudge the gas pedal a little harder next year after Gov. Pat Quinn overcame safety concerns and approved legislation Monday that will raise the speed limit on rural interstates to 70 mph.

Dodging a possible veto showdown, Quinn signed the measure despite opposition from the Illinois Department of Transportation, state police and leading roadway safety organizations, who feared increased mayhem on the highways, especially between cars and trucks.

“This limited 5 miles-per-hour increase will bring Illinois’ rural interstate speed limits in line with our neighbors’ and the majority of states across America, while preventing an increase in excessive speeding,” Quinn said in a statement.

The six-county Chicago region — home to some of the nation’s busiest interstates — would be allowed to set lower speed limits under the law, as would two Illinois counties near St. Louis. The speed limit would increase on the Illinois Tollway but also could be kept at current limits on some stretches, according to the governor’s office.

The speed limit in Illinois is 55 mph in metropolitan areas and 65 on rural highways. But on Jan. 1, Illinois will become the 37th state to approve limits of 70 mph or higher since the national speed limit was repealed almost two decades ago.

(click here to continue reading Quinn signs 70 mph speed limit law for Illinois – chicagotribune.com.)

 Steep Road Ahead

Steep Road Ahead

while in some areas of Texas, the conservative mantra of private profit over public services finally yields to reality – the government cannot afford to maintain the roads anymore.

Citing a funding shortfall and the impact of a historic oil drilling boom, Texas Department of Transportation officials on Thursday announced plans to move forward with converting some roads in West and South Texas to gravel.

Approximately 83 miles of asphalt roads will be torn up and converted to “unpaved” roads, TxDOT Deputy Executive Director John Barton said. The speed limits on those roads will probably be reduced to 30 mph.

“We would do these immediately, and I would suspect we would continue to convert other roadway segments as we continue to move forward,” Barton told the Texas Transportation Commission.

All of the affected roads have been so heavily damaged by truck activity related to oil and natural gas exploration that they have become safety hazards, Barton said. The process of converting the roads to gravel can be done quickly but will probably be delayed a few weeks as TxDOT gets permission from the commissioners to lower the speed limits on all of the impacted segments, Barton said.

The impacted roads are in four South Texas counties — Live Oak, Dimmit, LaSalle and Zavala — and two West Texas counties — Reeves and Culberson. The list of impacted roads includes a three-mile stretch of frontage road for Interstate 37 in Live Oak County. Barton said a plant that processes oil and natural gas has dramatically increased the truck traffic on that road.

“Instead of whipping in at 70 miles per hour, they’ll have to move in there at 30 miles per hour,” Barton said.

(click here to continue reading TxDOT Plans to Convert Some Roads to Gravel | The Texas Tribune.)

Illinois is no haven of joy, but at least the IL government isn’t so cowed by corporations they cannot collect enough in taxes to keep roads paved…

The part I cannot understand is why Rick Perry’s friends in the oil industry are allowing this to happen. Won’t slower traffic impact profits? 

Austin Capitol From The East Side
Austin Capitol From The Left Side

Steve Benen adds:

The state legislature briefly considered tax increases on energy companies — the companies that have benefited greatly from the energy boom, and which are chiefly responsible for pushing the roads quite literally past the breaking point — but as you might have guessed, those proposals faced stiff political opposition and never gained traction in Austin.

Darlene Meyer, a 77-year-old rancher whose property sits along a state road marked for conversion to gravel, told the Texas Tribune, “Texas used to have the best roads…. I just can’t believe the Department of Transportation is going back to the dark ages.”

…On the one hand, Gov. Rick Perry (R) believes Texas’ economy is amazing, and he’s managed to strike the perfect balance between meeting the public’s needs and keeping the private sector happy. Every other state, the governor assures us, should be following Texas’ lead — after all, thanks to the energy sector, the Lone Star State has plenty of money.

On the other hand, thanks to wear and tear from the oil companies, which have made themselves remarkably rich from Texas’ resources, Texas can no longer afford to pave many of its roads, and will instead transition from pavement to gravel.

(click here to continue reading A different kind of Stone Age – The Maddow Blog.)

Free Congress From Grover Norquist

Seth Anderson0 comment

Interesting discussion from Professor Robert Thurman, attempting to start a meme, questioning why signing Grover Norquist’s pledge to destroy the government is not a subversive, impeachable act. The professor has a point: signing an oath to an unelected organization whose sole purpose is to starve the “beast” of government is akin to signing an oath to violently overthrow the US Constitution. Unpatriotic at the very least, and maybe an impeachable offense. Why should we hire (i.e., elect) people who hate the country so much?

Give a listen to his ten minute speech, what do you think? 

The Oath of office1 reads:

I, [name], do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God.

Americans For Tax Reforms oath against the interest of the United States Government reads:

I, ________________________, pledge to the taxpayers of the state of _______________________, and to the American people that I will:
ONE, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses;
and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

Footnotes:
  1. full name is United States Uniformed Services Oath of Office [↩]

Don’t buy the right-wing myth about Detroit

Seth Anderson0 comment

Money Won't Change You
Money Won’t Change You

David Sirota has an excellent point about the conservative narrative about Detroit. Notice how many times pensions get mentioned in coverage of Detroit’s bankruptcy and how many times corporate welfare does. 50 times to once? Something like that kind of ratio. Basically ignored, in other words. Corporate welfare is sacrosanct; pensions, not so much.

That brings us to how this all plays into the right’s push to enact ever more regressive tax cuts, protect endless corporate welfare and legislate new reductions in workers’ guaranteed pensions.

These latter objectives may seem unrelated, but they all complement each other when presented in the most politically opportunistic way. It’s a straightforward conservative formula: the right blames state and municipal budget problems exclusively on public employees’ retirement benefits, often underfunding those public pensions for years. The money raided by those pension funds is then used to enact expensive tax cuts and corporate welfare programs. After years of robbing those pension funds to pay for such giveaways, a crisis inevitably hits, and workers’ pension benefits are blamed — and then slashed. Meanwhile, the massive tax cuts and corporate subsidies are preserved, because we are led to believe they had nothing to do with the crisis. Ultimately, the extra monies taken from retirees are then often plowed into even more tax cuts and more corporate subsidies.

We’ve seen this trick in states all over America lately. In Rhode Island, for instance, the state underfunded its public pensions for years, while giving away $356 million in a year in corporate subsidies (including an epically embarrassing $75 million to Curt Schilling). It then converted the pension system into a Wall Street boondoggle), all while preserving the subsidies.

Similarly, in Kentucky, the state raided its public pension funds to finance $1.4 billion a year in tax subsidies, and then when the crisis hit, lawmakers there slashed pension benefits — not the corporate subsidies.

The list of states and cities following this path goes on — but you get the point. In the conservative narrative about budgets in general, the focus is on the aggregate annual $333 million worth of state and local pension shortfalls — and left out of the story is the fact that, according to the New York Times, “states, counties and cities are giving up more than $80 billion each year to companies” in the form of tax loopholes and subsidies.”

The mythology around Detroit, then, is just another version of this propaganda.

(click here to continue reading Don’t buy the right-wing myth about Detroit – Salon.com.)

Stilton with candied lemon peel
Stilton with candied lemon peel

and those evil, greedy workers are always the problem. How dare they depend upon $19,000 a year pensions – that they paid with their work for 20 years or longer – when corporations need free cheese! $80,000,000,000 a year in free cheese – cheese that could be spread elsewhere…

So, for instance, from the administration of right-wing Gov. Rick Snyder, we are hearing a lot of carping about the $3.5 billion in pension obligations that are part of the city’s overall $18 billion in debt. The focus leads casual onlookers to believe that — even though they on average get a pension of just $19,000 a year — municipal workers’ supposed greed single-handedly bankrupted the city. What we aren’t hearing about, though, is the city and state’s long history of underfunding its pensions, and using the raided money to spend billions of dollars on corporate welfare.

For a good sense of some of the most expensive, absurd and utterly wasteful boondoggles in the Detroit area over the last few decades, read this piece from Crain’s Detroit or see this 2011 article entitled “Detroit’s Corporate Welfare Binge” by Detroit News columnist Bill Johnson. Alternately, recall this is in the heart of a region that infamously spent $55.4 million in 1975 (or a whopping $180 million in inflation-adjusted dollars) on a football stadium and then sold it off for $583,000. Or, just note that Detroit is the largest city in a state that, according to the New York Times, spends more per capita on corporate subsidies — $672 (per capita) or $6.6 billion a year — than most other states.

It Pays to Play
It Pays to Play

There’s more to the myth of course, NAFTA, taxes and the like.

In the conservative telling of this particular parable, Detroit faces a fiscal emergency because high taxes supposedly drove a mass exodus from the city, and the supposedly unbridled greed of unions forced city leaders to make fiscally irresponsible pension promises to municipal employees. Written out of the tale is any serious analysis of macroeconomic shifts, international economic policy failures, the geography of recent recessions and unsustainable corporate welfare spending.

This is classic right-wing dogma — the kind that employs selective storytelling to use a tragic event as a means to radical ends. In this case, the ends are — big shocker! — three of the conservative movement’s larger long-term economic priorities: 1) preservation of job-killing trade policies 2) immunity for corporations and 3) justification for budget policies that continue to profligately subsidize the rich.

Read David Sirota’s entire indictment yourself, and remember it when you next hear a bloviator discuss Detroit pensions, or austerity…

Darrell Issa saved by the news cycle

Seth Anderson0 comment

Master and Servant
Master and Servant

Remember how this faux controversy unfolded next time Darrell Issa is talking. He is not an honest man, nor should he be trusted.

In particular, the controversy over IRS scrutiny of Tea Party groups has largely disappeared from the headlines. Considering how much of a political gift that particular controversy was to Republicans, you’d expect them to be upset about this fact. But recent revelations have actually given them cause to celebrate the nation’s short attention span.

It was revealed this week, in fact, that the entire scandal was essentially a set-up. First, acting IRS commissioner Danny Werfel testified that the IRS also scrutinized and challenged groups with names that included “Occupy” and “progressive.” IRS documents released by House Democrats supported his testimony. The IG didn’t uncover targeting of liberal groups because it wasn’t asked to.

The spokesman for the Treasury inspector general noted their audit acknowledged there were other watch lists. But the spokesman added: “We did not review the use, disposition, purpose or content of the other BOLOs. That was outside the scope of our audit.”

We then learned that the entire reason the Treasury Inspector General highlighted IRS scrutiny of conservative groups, but not liberal groups, was because the IG had been instructed to do so by Issa.

(click here to continue reading Issa saved by the news cycle – Salon.com.)

See – no scandal, just partisan political bullshit to attempt to embarrass President Obama’s Administration. 

I think the bigger problem is actually the designation that allows political organizations to be tax-free at all. Why this loophole? Eliminate the 501(c )(4) category outright, because it is a joke. Corporations can funnel unlimited cash to these alleged social welfare organizations, untrammeled by disclosure; is that really good for the political process?

To be tax-exempt as a social welfare organization described in Internal Revenue Code (IRC) section 501(c)(4), an organization must not be organized for profit and must be operated exclusively to promote social welfare. Theearnings of a section 501(c)(4) organization may not inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any managers agreeing to the transaction. See Introduction to IRC 4958 for more information about this excise tax. For a more detailed discussion of the exemption requirements for section 501(c)(4) organizations, see IRC 501(c)(4) Organizations. For more information about applying for exemption, see Application for Recognition of Exemption.

To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). For example, an organization that restricts the use of its facilities to employees of selected corporations and their guests is primarily benefiting a private group rather than the community and, therefore, does not qualify as a section 501(c)(4) organization. Similarly, an organization formed to represent member-tenants of an apartment complex does not qualify, because its activities benefit the member-tenants and not all tenants in the community, while an organization formed to promote the legal rights of all tenants in a particular community may qualify under section 501(c)(4) as a social welfare organization. An organization is not operated primarily for the promotion of social welfare if its primary activity is operating a social club for the benefit, pleasure or recreation of its members, or is carrying on a business with the general public in a manner similar to organizations operated for profit link].

Seeking legislation germane to the organization’s programs is a permissible means of attaining social welfare purposes. Thus, a section 501(c)(4) social welfare organization may further its exempt purposes through lobbying as its primary activity without jeopardizing its exempt status. An organization that has lost its section 501(c)(3) status due to substantial attempts to influence legislation may not thereafter qualify as a section 501(c)(4) organization. In addition, a section 501(c)(4) organization that engages in lobbying may be required to either provide notice to its members regarding the percentage of dues paid that are applicable to lobbying activities or pay a proxy tax. For more information, see Lobbying Issues .

The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f). For further information regarding political and lobbying activities of section 501(c) organizations, see Election Year Issues, Political Campaign and Lobbying Activities of IRC 501(c)(4), (c)(5), and (c)(6) Organizations, and Revenue Ruling 2004-6.