Progressive Thinking

Citizen Action of Wisconsin believes outsourcing scandal shows whole WEDC model is flawed and can only be permanently fixed by scuttling the agency.

STATEWIDE - Yesterday Governor Scott Walker told WKOW TV 27 Madison that he was open to more sanctions against companies that take state job creation money and then outsource Wisconsin jobs.

This is a major reversal for the Walker, whose administration has repeatedly denied Citizen Action of Wisconsin’s contention that it is still perfectly legal for companies to outsource and to also receive large grants, loans, and tax credits from the Governor’s jobs agency, the Wisconsin Economic Development Corporations (WEDC). In October, Wisconsin Public Radio reported that WEDC officials refused to respond to Citizen Action’s contention. WEDC also refused to respond to similar questions from the Shepherd Express.

Wednesday Senator Dave Hansen (D-Green Bay) announced he was drafting an outsourcing accountability bill. Senator Hansen’s bill bans companies who receive public economic development money and then outsource jobs from state aid for a period of five years. Hansen’s bill follows revelations first reported by WKOW TV Madison that a multinational corporation, Eaton Corp., receiving state economic development support is outsourcing Wisconsin jobs to Mexico for a second time.

Citizen Action of Wisconsin believes that the outsourcing scandal demonstrates that the entire WEDC model is hopelessly flawed and can only be permanently fixed by scuttling the agency.

“The outsourcing scandal is only the tip of the iceberg. That state aid to corporations engaged in undermining Wisconsin workers is even possible debunks Governor Walker’s whole idea that precious state job creation dollars should be doled out by an unaccountable semi-public agency like WEDC,” said Robert Kraig, Executive Director of Citizen Action of Wisconsin. “The best solution to the failure of the WEDC model is to disband it, and create a fully accountable public agency which focuses investments like a laser beam on creating family supporting jobs, not merely doling out money to multinational corporations who are selling out Wisconsin workers.”

Reporting by the Milwaukee Business Journal sheds further light on WEDC’s shobby outsourcing standards. WEDC officials have claimed that performance standards assure that companies receiving state assistance are adding jobs to the economy, even if they are also engaged in outsourcing. However, business reporter Tom Held found that Eaton received nearly $370,000  in WEDC tax credits to create 25 jobs and to retain 150 jobs. They then turned around and outsourced 93 jobs to Mexico, a net loss of 68 jobs in Wisconsin.

Citizen Action of Wisconsin also argues that preventing the merger of WEDC with another public authority simply leaves the present failed system in place.

Green Bay's Senator is drafting legislation to ban companies that outsource jobs from receiving taxpayer assistance for five years. Recent news reports show outsourcing continues while number of delinquent loans has tripled.

MADISON - State Senator Dave Hansen (D-Green Bay) announced today that he is drafting legislation to ban companies from receiving taxpayer assistance for five years if they are found to have outsourced jobs from Wisconsin after receiving state aid.

“We are seeing all too often under WEDC cases where companies have received help from state taxpayers for the purpose of creating jobs only to send Wisconsin jobs out of state or overseas while state officials appear to ignore it or look the other way,” said Hansen.

Corporations taking state tax dollars intended for job creation only to layoff Wisconsin workers in favor of lower cost labor in other countries are becoming an increasing problem. According to Channel 27 News in Madison outsourcing by Eaton Corporation is just the latest example:

“A global power systems management corporation that has received nearly $370,000 in tax incentives from the Wisconsin Economic Development Corporation (WEDC) since 2012 is shipping jobs from Wisconsin to Mexico for the second time in three years.

Eaton Corp. announced last week it is permanently discontinuing the manufacture ofprinted circuit boards at its facility in Watertown, which will result in the elimination of 93 employees there.”

“When a corporation promises to create jobs here in order to receive $370,000 in taxpayer money and then actually eliminates jobs here and sends them to a foreign country one can only assume there is no fear they will be held accountable for their actions,” said Hansen.

Under Hansen’s bill any company that is found to have outsourced jobs from Wisconsin after receiving taxpayer funded assistance would be banned from applying for future taxpayer help for five years.

According to Hansen: “Protecting Wisconsin jobs requires more than lip service. There needs to be consequences for taking taxpayer money on the promise that you’re going to create jobs and then do the opposite. If we are going to hold people on the bottom rungs of the economic ladder accountable when they do not fulfill the responsibilities required of them to receive taxpayer help we should hold those at the top accountable as well.”

Governor Walker’s administration continues to struggle to meet his promise of creating 250,000 jobs amid reports that Wisconsin has fall to 38th in the nation for job creation and Wisconsin is on track to see its highest number of layoffs since Governor Walker first took office in 2011.

“Given the dismal performance of this administration you might think they would be taking a tougher stand on outsourcing. But given this latest report it appears to be business as usual—corporations taking taxpayer dollars while giving their jobs to foreign countries,” Hansen concludes.

Scandal-plagued WEDC agency linked to business outsourcing again.

MADISON – Multiple news reports have revealed that a Wisconsin company that received $370,000 in taxpayer subsidies from Gov. Walker’s Wisconsin Economic Development Corporation (WEDC) plans to cut 93 positions and outsource Wisconsin jobs to Tijuana, Mexico. The Eaton Corporation in Pewaukee, WI had previously outsourced 163 Wisconsin jobs to Mexico in 2013. Governor Walker serves as the Chairman of the WEDC.

At a time when Wisconsin is facing a $2.2 billion budget deficit, it is unacceptable that Republicans would provide taxpayer subsidies to a company with a history of outsourcing Wisconsin jobs. It’s time to start investing in Wisconsin families and stop subsiding corporations that outsource jobs.

While Gov. Walker continues to travel around the nation preparing for his presidential campaign, Wisconsin has plummeted economically. Recent reports have shown that family wages are declining, poverty rates have increased and Wisconsin has dropped to 40th in the country for job creation.

Rather than catering to out-of-state special interests, we need to invest in local businesses that are going to stay in Wisconsin and pay their workers a fair wage. Democrats remain committed to boosting family wages, creating quality jobs and investing in the 21st century infrastructure that is needed to move our state forward.

Why doesn’t the press cover what’s happening with refundable tax credits? This week Sen. Kathleen Vinehout writes about tax credits – the difference between non-refundable and refundable tax credits, the impact on the budget and Wisconsin taxpayers.

MADISON - “Why doesn’t the press cover what’s happening with refundable tax credits?” I asked the journalist. We were chatting about what I found in the state budget.

“Because the press doesn’t understand them,” she told me.

“Doesn’t understand them?” I thought. “There has to be an easy way to describe what’s happening...”

Imagine if you had no state tax taken out of your paycheck. You filed your tax return but you owed nothing. Now imagine the state sent you a refund check. Wow!

This is like a refundable tax credit. A company owes little to nothing in taxes but gets a check back from the state - cash from the taxpayers of Wisconsin.

Tax credits are different than deductions on your income tax form. The credit is subtracted dollar for dollar from the tax you owe - simple subtraction. You owe $1,000. You have a $500 credit. You now owe $500.

But what if your credit was $10,300,000? Under a refundable tax credit you would end up with a check for $10,299,000.

According to the nonpartisan Legislative Fiscal Bureau (LFB) Wisconsin has two refundable tax credit programs: “Enterprise Zone Tax Credits” and “Jobs Tax Credits.” The “Enterprise Zone” used to refer to a designated place in which eligible businesses received tax credits for economic activity. In recent years it morphed into a credit to designated companies for jobs created and retained, training, capital expenditures and purchases from Wisconsin vendors.

A recent publication from the LFB details the 18 recent recipients of “Enterprise Zone Awards”. The table below is in millions of dollars:

Mercury Marine $65.0

Kohl’s Corporation $62.5

Quad/Graphics $46.0

Oshkosh Corporation $35.0

W Solar Group $28.0

Fincantieri Marine Group $28.0

Bucyrus $20.0

Uline $18.6

Kestrel Aircraft Company $18.0

Plexus $15.0

Northstar Medical Radioisotopes $14.0

Amazon.com.dedc LLC $10.3

Weather Shield Manufacturing $8.0

The report also details five other designated “Enterprise Zones”: 1) Insinkerator; 2) Ashley Furniture; 3) Medline Industries, Inc.; 4) Trane; and 5) Exact Science. The LFB reported in January that Wisconsin Economic Development Corporation (WEDC) had not yet entered into contracts with these five companies to finalize the amount awarded.

WEDC is authorized to designate up to 20 “Zones” and the Governor designates an additional ten “Zones” in the budget. The Administration estimates this action would have a ten-year price tag of $168.8 million for Wisconsin taxpayers.

The Governor also wants to take a nonrefundable tax credit (economic development tax credits) and convert it into a refundable tax credit. WEDC is currently authorized to spend $164.2 million on the “economic development tax credits”.

Why rush to create NEW refundable tax credits? Perhaps the Manufacturing and Ag Tax Credit has something to do with the rush. A late budget amendment in 2011 created this credit targeted at manufacturing companies. The tax credit takes tax rates for manufacturing and ag corporations down to .04% by 2016.

What happens if you owe less than 1% on your profits? Pretty soon your tax obligation is so small another tax credit isn’t help much. Step in the refundable tax credit. You owe nothing? You still get a check.

How much might these companies have paid if not for the tax credits slipped into the budget in 2011? The LFB estimated the fiscal impact of just the Manufacturing and Ag credit at $509 million in the coming budget.

So what’s lost to Wisconsin taxpayers when the companies owing little to nothing in taxes cash their refundable tax credit checks?

School funding reform for one – the manufacturing tax credit money would more than cover changes in the school funding formula and hold harmless the wealthier suburban schools. The University of Wisconsin System for another – the credits awarded in the table above would more than cover the Governor’s proposed university system cuts.

Fixing things like the state parks, Wisconsin Public TV and Radio, Family Care and IRIS could be done with the money given in credits to just Plexus. Dollars headed to Uline could instead fund SeniorCare and the School Violence Prevention Program.

Decisions made to give dollars away to profitable corporations have a big impact on future choices.

Distrust of government is in our country’s DNA. The GOP has successfully passed themselves off as the party of less government, but the truth is that both major parties want big government to work for a privileged few at the expense of the many.

MADISON - Suspicion and distrust of government is a core American value. It is in our country’s DNA.

Republicans have proven far more capable than Democrats at both recognizing and capitalizing on this fact, taking great pains to pass themselves off as the party favoring less government while their opponents are for more government.

The GOP has successfully created a perception.

Then there is reality. The truth is that both major parties want big government. Both have worked persistently to expand government’s size and reach.

The truth is that the biggest expansion of the federal government in the last half-century was the doing of a Republican administration with near-universal support of Republicans in Congress. That would be the creation of a vast new federal bureaucracy devoted to domestic surveillance and a radically enlarged police presence.

Today’s Republican Party also favors a very activist and intrusive government with respect to our personal lives, morality and sexuality. Republicans talk a good game about trusting in individuals to make their own life choices and in families to serve as the moral backbone of our society. But there is a big gap between word and deed. Modern-day Republicans have repeatedly supported interventions that effectively put government everywhere from the bedroom to the doctor’s office. They have repeatedly sought to dictate who can love and marry whom, and have not hesitated to meddle in doctor-patient relationships and medical decision making.

Democrats are known as the architects of the welfare state. Republicans are devoted to the public dole, too. In fact, the kind of welfare Republicans favor dwarfs the Democrats’ welfare programs. The truth is both parties like to fill the public trough. They just have very different ideas about who should be allowed to feed from it. The debate we should be having is how to create an economy where both kinds of welfare are unnecessary and can be eliminated. Neither major party has shown much interest in that conversation.

Blue Jean Nation believes government is necessary to a civil and just society and prosperous economy. But we insist on a limited government – one that is as small as possible and only as big as required to do what society needs done collectively. Government programs that work should be supported and ones that do not should be reformed or ended. Most importantly, what government does must serve the broad public interest and promote the common good, not just benefit those who lavishly fund election campaigns or have high-priced lobbyists advocating on their behalf.

So much time and energy is wasted fruitlessly arguing over which party wants more government and which one wants less, when the plain evidence shows that both are equally skilled at making government bigger. If we spent half as much time zeroing in on government’s purpose – what it does and for whom – as we spend assigning blame for its size, then we would really get somewhere.

Both major parties have proven they are for big government. And both have shown a distressing tendency to put government to work for a privileged few at the expense of the many. That’s what needs to change. We need a repurposed government, one that is serving the whole of society both consistently and well.