Corporate Welfare-Straight From Workers To Employers

David Cay Johnson, via Ritholtz:

"Job piracy" occurs when one state diverts taxes to lure an employer across state lines. AMC Entertainment announced a deal last year to move its corporate headquarters from Kansas City, Mo., to a nearby Kansas suburb. In return, Good Jobs First said, Kansas will let the multiplex chain keep $47 million of state income taxes withheld from its workers' paychecks, a drain on public finances that did not create any jobs, but does enrich the Wall Street firms that own AMC including arms of J. P. Morgan, Apollo Management, Bain Capital and the Carlyle Group. AMC declined to answer my questions.

"Job blackmail" occurs when a company threatens to close a plant unless it gets tax money.

In Illinois, the law requires companies to threaten to leave before they can keep taxes withheld from paychecks. Motorola Mobility, now being acquired by Google; the truck maker Navistar; the German manufacturer Continental Tire, and three auto makers - Chrysler, Ford and Mitsubishi - get to keep $346.8 milli on in t axes over 10 years because they threatened to leave Illinois. Navistar can pocket $62.1 million even if it fires a quarter of its Illinois workforce, its contract shows. A recent deal gives Sears $150 million, Good Jobs First reported. Promising to retain jobs can be lucrative. General Electric invested $126 million updating part of its Ohio operations. In return, GE gets a tax credit equal to $115.3 million of its worker taxes, recovering 92 percent of its investment. A sweet deal for GE, but not its competitors.

Gary Sheffer, GE's top spokesman, said the company told its workers about the deal. In all, he said, GE is investing around $300 million in Ohio and "the resulting taxes the state will receive will far exceed the tax credits provided to GE."

That response, I think, misses the point - GE should pay its own bills without taking welfare.

This is such a stupid crock of shit.  Businesses make bullshit claims and get state subsidies, then complain about having a hard time finding qualified workers.  Screw you, assholes, you get what you pay for, or maybe I ought to say, you get what you don't pay for and instead steal from.

As far as the job blackmail goes, here is my favorite example, and this by an interesting company I've mentioned before:

  Iron Range officials are upset with threats by Magnetation Inc. to build a $300 million iron ore processing plant in another state to get around Minnesota's tough mercury pollution rules.
The Duluth News Tribune reports Magnetation (http://bit.ly/wYhNMD) is considering sites in Superior, Wis., Indiana and Illinois as an alternative to Minnesota's Itasca County for a plant that will employ about 150 people.
Rep. Tom Rukavina and St. Louis County Commissioner Keith Nelson are criticizing the company because Minnesota gave Magnetation state grants and loans to help it get started.
Magnetation CEO Larry Lehtinen says the company needs a pellet plant operating somewhere by early 2015, and that will require permits in hand this fall. He says Wisconsin, Indiana and Illinois can meet that timeline, but Minnesota regulators haven't made that promise.

Followed by this:

 Governor Mark Dayton signed a new law today that keeps Minnesota in the running for Magnetation Incorporated's 300 million dollar taconite pellet plant project.
The CEO of Magnetation , Larry Lehtinen told the Northlands NewsCenter the new law is an improvement in the environmental permitting process.
Lehtinen says it keeps Minnesota in the running, as his company considers a site for its plant which will create 100 direct jobs.
Representative Tom Anzelc believes the new law makes Minnesota "more" competitive than the other sites and it puts Itasca County in the lead for the plant.
The law which has strong Iron Range support is considered the "2.0" version of one passed last year to speed up the environmental permitting process.
This new version allows the DNR and the PCA to conduct a "pilot program" for an alternative form of environmental review.
If Magnetation does select Itasca County to build its plant, it would be one of just three selected for the pilot program.
Wisconsin and Indiana are also in the running for the pellet plant.

 Tailings, seen in the background, could be a boon for familiies in the range, where the unemployment rate hovers at 13.5%.

Now consider what the company does.  They reprocess iron ore tailings to recover additional ore.  The company is located in the Iron Renge because that's where the tailings are.  The company is proposing to transport the millions of tons of tailings to Superior, Wisconsin (theoretically feasible, but ridiculously stupid) or Indiana (wtf?).  I'd be damn tempted  to tell the company to have fun in Indiana hauling what amounts to massive piles of waste out of my state, if I were governor Dayton.  Good luck getting that business plan to work out, with $4.25 diesel fuel prices to pay.  And this is a startup which has already received state assistance.  That takes some outsized balls to attempt.  I think the company is on to a good idea, but it appears their business plan isn't may not be economically feasible yet if they are  may be using so much job blackmail to get breaks to stay in a region they have to be in.  Either that, or they are extremely greedy bastards.