NYT: Towns Hand Out Tax Breaks, Then Cry Foul as Jobs Leave

[RamboLiberal]

http://www.nytimes.com/2004/10/20/national/20taxes.html?ei=5094&en=0d611c5c491d744e&hp=&ex=1098244800&partner=homepage&pagewanted=print&position=

People in this big-shouldered town, birthplace of the poet Carl Sandburg, say Maytag broke their hearts. After a decade of tax breaks and union concessions to keep the company in a place that has been making refrigerators for more than 50 years, Maytag closed its factory last month, terminating 1,600 jobs.

Maytag may be done with Galesburg, but Galesburg is not done with Maytag.

District Attorney Paul L. Mangieri wants to sue Maytag to recoup what he says were excess tax breaks in a broad package of incentives to keep the company here. Much of the money, he said, came from a purse that would have gone to schools in this economically fragile community.

"We gave Maytag these incentives, and they accepted them," said Mr. Mangieri, a Navy veteran who grew up in a small town not far from here in western Illinois. "We did it based on faith and trust. If we don't do anything now, it sends a message that we lack the resolve to treat the rich and privileged the same as everybody else."

Maytag says it honored its agreement and took just the breaks to which it was entitled.

[nothingshocksmeanymore]

1. Did they say ENTITLEMENTS???

[acmavm]

2. "and took just the breaks to which it was entitled." Now that describes

what's wrong, using their own words no less.

[aquart]

3. "Entitled," my ass. Let's talk "obligated."

Perhaps localities will write obligation contracts before handing out breaks.

How much of those tax breaks ended up as executive compensation????

[lostnfound]

4. New documentary The Take explores worker-occupied Argentinian factory

after similar treatment by the (tile) factory owners. It looks great -- Naomi Klein & Avi Lewis produced it.

In one interview, the workers commented that the factory had been given a lot of tax breaks, and since the factory was being shut down (without repayment of the tax breaks), the workers (& the town) had a right to 'expropriate' the factory.

Some perspectives that should not be overlooked in the rush to judgment are 1) the corporation as cost-externalizer and 2) the existence of great obstacles to city governments being able to negotiate basic contract protections on behalf of their citizens. With regard to #2, in comparison to corporate-to-corporate contracts, IMO cities are much less likely to be able to demand early-termination penalties for example.City officials (somewhere) can be bribed; and the political focus is short term. A great example is the fact that the recent Medicare bill prohibits negotiation for better prices.

[MisterP]

5. not surprising at all: modus operandi for multinationals

in SE Asia, Latin America, West and Central Africa (with pillaging and genocide-sponsoring thrown in even more!), Imperial Iran, and wherever Thatcherism and Reaganomics are sold.

[KT2000]

6. "Faith and trust?"

learned on C-Span-2 recently that Wal-Mart is being built on such tax breaks.
Taxing districts are being played for fools by corporate "entitlements."

[LizW]

13. true about WalMart

I heard the mayor of our city speak on this subject about a year ago. She said she met with WalMart about trying to get them to come here (yes, the woman is misguided, but that's a subject for another post). She said they demanded all sorts of tax breaks and perks. She was stunned, and told them, "We don't do that." They said, "Fine, we'll build the store in the city right next to you."

[UpInArms]

7. and people want to vote based on

"faith and trust" and not hold the corporations or the wealthy to the same standards that they do others.

That just about says it all -

"We did it based on faith and trust. If we don't do anything now, it sends a message that we lack the resolve to treat the rich and privileged the same as everybody else."

I just wish that people would use the brain that gawd gave them - it would save us all so much agony.

[madrchsod]

8. up to 10 thousand people have been

or will be laid off across central illinois this year and into 2005....

[BootinUp]

9. Galesburg revolution

hopefully it will spread. ;)

[TomClash]

10. Very simple

Only stock price matters.
That's how top management gets paid.
The stock price must always be high and only on the rise.
So steal from the taxpayer to raise the stock price higher.
So pay the help slave wages without benefits.
If not here then China, India, Malaysia, whereever.
Then the burger-flipper can buy her products much cheaper.
At Wal-mart.

[0rganism]

11. Maybe it's time to start revoking corporate charters for shit like this?

Corporations present themselves as sovereign entities with all the rights of a human, but in truth they are allowed to exist only with the premise that they will deal in good faith with the public. A corporation can be dissolved if the state wills it dissolved, and its assets can be auctioned off to those deemed more capable of serving the public interest.

If only We The People understood the power we have.

[JM]

12. Sorry, but I think the town leadership

needs to take the heat for this. True Maytag took advantage of an advantageous situation, but the leaders of Galesburg did nothing to cover their own ass.

I have had this discussion wiith my boss repeatedly over the last six months. You can no longer take people at their word in this country. Everything must be documented and signed if it to be adhered to.

If the town leadership expected an outcome from the tax breaks, they should have written a contract prior to the breaks being implemented. If Maytag then chose not to abide, the breach of contract is obvious and enforceable. If Maytag didn't want to sign it, then so be it, and at least the citizens know up front who they are dealing with and that their representatives are acting in their interest.

JM

[mbperrin]

14. Actually, many companies sign off on these, and all they have

to do to get it set aside is file for bankruptcy. There's been a rash of it in Texas lately. Get the bucks, get out of town with a judge's help.

After all, we're not dealing with anyone with ethics here. These are money-grubbers who neither care for their company's outcome, the communities they live in, just their own golden parachutes!

Do not pay anyone to go in business. If they can't make it without it, they won't make it. If they can, they will. Spend money on people, not companies; educate, house, heal.

[JM]

16. Agreed, but

it sounds like in this particular case, it was a handshake deal.

I have my own theories about tax subsidies toward business.

Business loyalty and attraction is like lawncare. Everyone has had a lawn at some point or another. Loss of business is the giant brown dead spot in the middle. There are two ways to fix it. One way is sod. Putting down sod involves prepping the dead spot, then placing a peice in with the hopes it will take.

The other approach is to prep the land, lay seed and topsoil, water it, and don't walk on it. Soon it will grow in its own root structure and will stay in place longer.

Big business is sod. It has its own root structure of vendors and customers in place already. It has no loyalty, so it will take or it will move, leaving you your wonderful brown spot.

Small business is seed. You will lose some along the way, but when they grow together and build their root structures together, it makes it more difficult for them to leave. You may have smaller brown spots, but they can be more easily filled in.

Taxation is the equivalent of walking on your new grass. Note how you can take a roller over sod to press it down, and walk on it immediately, but you can't on new grass.

JM

[reprobate]

17. Simple answer: Company files bankruptcy, cancel their charter.

Make it a federal law, so any state they file in, their state of residency (where their charter was issued) automaticly cancels charter.

Of course the real answer is to remove the 'corporate personhood' principle which BTW was never determined by the USSC, just the court clerk. This is the real cause of all the evil the corps have committed since the mid 19th century.

[Art_from_Ark]

15. There is an initiative on the Arkansas ballot

that would allow the state legislature to issue bonds for any economic development project that would be worth at least $500 million and create at least 500 jobs. But then this article got me thinking-- if a company had the resources to do all that, why would it need state-guaranteed bonds? What kinds of perks would the company get from the state? And if the company packed up and left, who would be stuck with the bill?

[FlaGranny]

18. It's not that the company needs it at all.

The WANT it. They'll go where they get the best breaks because that's what puts more money in their pockets. Companies have states competing for their business using tax breaks. It goes right down to county and then municipal level with one town fighting another by giving bigger tax breaks to the company.

[SoCalDem]

19. This is how the "big-boxes" take over too.. Our town was SO EAGER

to have a mall and a bunch of big-boxes, that we gave them a 10 year "tax holliday".. During the run-up to them being built, the rationales was that they would not only produce jobs, but they would bring in tax revenue..

Of course, the mall was a FLOP,,still lots of never-occupied spaces...BIG ONES.. Sales are SHIT, so even after the 10 yr "holiday", they sales are probably miniscule..

Lots of local businesses folded when the mall opened, and THEY DID have customers and they paid sales tax..

and to put in the mall, they tore out Riverside raceway..which was a big draw to our town.. (We were still unincorporated back then..


Two developers were playing "chicken" with the mall stuff, and we ended up getting TWO lackluster shopping developments..both half empty failures..and no raceway..


and the kicker.. when the "holiday" is over, they property is "older" and unprofitable, so the owners just close it up, and leave a big ole empty big box that then costs the city money to secure and protect..

Know anyone who wants to rent a 140,000 sq ft empty box..it's right next to the empty theatre box..and across the street from some other big empty boxes..:(