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The very hungry Caterpillar eats our pensions.

January 22, 2013

fatcat

From Mike Klonsky’s blog: Schooling in the Ownership Society.

How much do Illinois’ largest corporations pay in state income taxes? It’s a complex question, but the answer is simple: Nobody knows. Well, almost nobody. The companies know, but they’re not telling. Tax collectors know, but they’re not allowed to tell. That leaves the rest of us with just one safe guess: as little as legally possible. –Chicago Tribune

If you’re looking for clues as to why a Democratic governor and House Speaker as well as a Dem-controlled legislature in Springfield, continues to go after the teachers pension fund instead of tax revenue from the biggest corporations, look no further than Caterpillar, Inc.

The company, the world’s largest construction-equipment maker, uses its campaign contributions to Democratic politicians like Michael MadiganDick Durban, and even Barack Obama when he was a state senator, along with threats to abandon Illinois for southern, right-to-work states like Georgia or move jobs offshore to China to leverage tax breaks.

From the Tribune:

“Cat,” made waves last year when CEO Douglas Oberhelman wrote a letter to Gov. Pat Quinn complaining about the recent hike in state tax rates. “I want to stay here,” he wrote from Cat’s Peoria headquarters. “But as the leader of this business I have to do what’s right for Caterpillar when making decisions about where to invest.”  And invest it has, building plants in right-to-work states such as North Carolina, Texas and Indiana, typically after securing millions in state and local taxpayer subsidies — as is routine now in a system that pits state against state, city against city, in a race to the bottom for jobs.

The Peoria-based company, which reported year over year earnings growth exceeding 250 percent, is among several U.S. multinationals asking Congress to end U.S. corporate income taxes on profits earned abroad. The company pulls in around $3.7 billion of pretax income on about $42.6 billion in revenue, 68 percent of which came from offshore. Last year, Cat closed its Canadian locomotive plant in London, Ontario, after unionized employees refused to accept a big pay cut. 780 union machinists then went on strike  for four months at the Cat plant in Peoria.

Caterpillar Inc. used offshore subsidiaries in Switzerland and Bermuda to avoid about $2 billion in U.S. taxes from 2000 to 2009, boosting its earnings through a “tax and financial statement fraud,” according to a Caterpillar executive’s lawsuit.

Then on the political side you have Caterpillar Inc. Director Miles White, Chicago’s highest paid CEO, who pulls down more than $25 million/year in compensation. He is also a big-wig in the Civic Committee of the Commercial Club of Chicago, the most rabid group when it comes to raiding the teachers pension fund and busting the teachers union.

Since a progressive state income tax appears to be the only viable alternative to cutting the pensions and health care of retirees, we’ve got to get rid of pols who are tied to corporations like Caterpillar or no change can come.

4 Comments leave one →
  1. January 22, 2013 4:32 pm

    So tired of hearing about how the corporations will move…..let them go to Alabama of Montana where there are fewer museums, orchestras, sport teams and universities….and the taxes are lower…..what a joke…..and I never go to Jimmy John’s now that they moved the corporate headquarters…

  2. January 22, 2013 9:06 pm

    Where is the rage?
    I always wondered why the people in Banana Republics took the abuse they took.
    Now I wonder the same about my fellow citizens. Where is the rage?

  3. January 22, 2013 9:30 pm

    Corporations don’t pay any taxes. They collect them — from shareholders, employees, customers and vendors. And they collect them very regressively, which is why true progressives don’t like corporate taxes and why Jimmy Carter wanted them cut.

    And you mentioned retiree healthcare. That unfunded liability alone of $50B is worsening at the rate of $2B per year and is not reflected the budget or pension numbers. So, I don’t see how the $2.5B that progressives claim will come from a progressive income tax can solve both the pension and healthcare problems as you claim.

  4. January 22, 2013 10:02 pm

    And again let’s all note the complicity of Dumbocrats – the party who spend their days fellating corporate rock stars then expect us to vote for them as they conspire to eliminate the American middle class.

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