Thursday, December 1, 2016

Tax Breaks to Corporations who return their stockpiled profits to US

 

We tried such repatriation of profits before (2004)—How well did it work?  Here is a Wall Street Journal reporter’s view in 2011.

 

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Report: Repatriation Tax Holiday a 'Failed' Policy

By

Kristina Peterson

Oct. 10, 2011 9:41 p.m. ET

WASHINGTON -- The 15 companies that benefited the most from a 2004 tax break for the return of their overseas profits cut more than 20,000 net jobs and decreased the pace of their research spending, according to report from the Democratic staff of the Senate Permanent Subcommittee on Investigations released Monday night.

The report warned against repeating the tax break, calling the 2004 effort "a failed tax policy" that cost the U.S. Treasury $3.3 billion in estimated lost revenues over 10 years and led to U.S. companies directing more funds offshore. U.S.-based multinationals often defer bringing back profits earned abroad to avoid paying U.S. taxes on them.

The 15 companies that repatriated the most after the 2004 tax break on the return of overseas profits later cut a net 20,931 jobs between 2004 and 2007 and slightly decreased the pace of their spending on research and development, found the report surveying 19 companies' activity.

When Congress passed the repatriation tax holiday in 2004, the legislation specified that the funds should be earmarked for activities like hiring workers or conducting research and prohibited using the money for executive compensation or buying back stock. Companies that brought back profits earned abroad saw them taxed at roughly 5%, instead of the top 35% corporate tax rate.

"There is no evidence that the previous repatriation tax giveaway put Americans to work, and substantial evidence that it instead grew executive paychecks, propped up stock prices, and drew more money and jobs offshore," Sen. Carl Levin (D., Mich.), chairman of the subcommittee, said in a statement Monday night. "Those who want a new corporate tax break claim it will help rebuild our economy, but the facts are lined up against them."

The survey comes less than a week after Sens. John McCain (R., Ariz.) and Kay Hagan (D., N.C.) introduced a proposal for another repatriation tax holiday that would lower the tax rate on repatriated funds to 8.75%, with the opportunity to see that decrease to 5.25% if a company expanded its payroll. In the House, Rep. Kevin Brady (R., Texas) introduced a similar bill in May.

However, repeating the 2004 repatriation tax break has already come under criticism from skeptics, including the conservative think tank the Heritage Foundation, who have argued that companies aren't low on capital and the tax break won't nudge them into making any investments they wouldn't already make.

The five companies that benefitted the most from the 2004 tax break included Pfizer Inc., Merck & Co., Hewlett-Packard Co., Johnson & Johnson and International Business Machines Corp., repatriating $88 billion, or 28% of the total amount brought back to the U.S., according to the report. In total, 843 companies brought back $312 billion, the Internal Revenue Service has assessed.

The report noted that Pfizer had the single largest share of the repatriated profits, bringing home $35.5 billion in foreign earnings, while also cutting 11,748 U.S. jobs between 2004 and 2007. Similarly, IBM brought back $9.5 billion, but cut 12,830 jobs, the report stated, citing answers from the companies in response to its questions.

Meanwhile, the top 15 repatriating companies also accelerated their spending on stock buybacks and executive compensation after the tax break. The top five executives at those 15 companies saw their compensation rise 27% from 2004 to 2005 and then another 30% between 2005 to 2006.

The tax break gave a boost to a narrow slice of U.S. multinationals, with pharmaceutical and technology companies reaping more of the benefits and provided "no benefit to domestic firms that chose not to engage in offshore operations or investments," the report found.

Companies brought back funds held in areas that the Government Accountability Office has labeled tax havens, including Switzerland, the Bahamas, Bermuda, the Cayman Islands and Ireland. Of the 19 companies surveyed by the committee, seven repatriated between 90% and 100% of their funds from tax havens.

The 2004 repatriation tax holiday further motivated companies to keep even more of their earnings overseas, the report found. With the exception of Pfizer, the 10 companies that repatriated the most money after the 2004 tax break have stashed increasing funds offshore every year since the 2004 tax break, the survey noted.

For example, Coca-Cola Co. brought back "nearly all" of its qualified earnings from a unit in the Cayman Islands that had no Cayman employees and functioned to provide "legal insulation" for its U.S. assets, the company answered in the survey.

The "negative effects" of the tax break "create unfair tax advantages for a narrow sector of corporations with damaging economic impacts on the U.S. economy as a whole," the report concluded.

Supporters of another repatriation tax holiday Monday night said the report was one-sided and didn't reflect the stimulating effect an influx of funds could have on the struggling U.S. economy.

"Unfortunately, Senator Levin believes that Europe and Asia can do better things with the money than America," said Win America, a coalition backing the tax break, in a statement. "The real question is, should we allow American companies the freedom to deploy this money here or risk it being spent overseas?"

Mr. Levin and Sen. Kent Conrad (D., N.D.), chairman of the Senate Budget Committee also sent a letter to the Joint Select Committee on Deficit Reduction urging the 12-lawmaker panel not to support a repatriation tax break in its proposal to reduce the federal budget deficit.

 

Above is from:  http://www.wsj.com/articles/SB10001424052970203633104576623771022129888

Rauner-Exelon deal clears way for nuke bailout

November 30, 2016

Comments Email Print

By Steve Daniels

Rauner-Exelon-nuke-deal.jpg

Photo by Thinkstock

Gov. Bruce Rauner and Exelon have agreed to an eleventh-hour deal that paves the way for a ratepayer-financed bailout that will keep two at-risk nuclear plants open.

The two sides negotiated last night and this morning and produced a framework that the governor can support. In a release, Exelon said it had agreed to changes in the wide-ranging legislation that limit the rate hikes for the average Commonwealth Edison household customer to 25 cents per month and a 1.3 percent increase for businesses based on their 2015 rates.

A number of business groups, including the Illinois Manufacturers Association, remain opposed, and there are questions about how strong those "rate caps" are.

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In addition, money for new “microgrids” requested by Exelon-owned Commonwealth Edison will be struck from the bill, sources said. ComEd originally wanted $250 million in ratepayer money to build five independently functioning mini-power grids for sensitive installations throughout northern Illinois. In negotiations, that was pared to just one, for the Bronzeville neighborhood on Chicago's South Side. Now that is gone, too, sources say.

Exelon's Clinton nuclear power plant. The utility had set a deadline of early December to reach agreement on a bailout bill, or it would be forced to close the downstate facility.

Exelon's Clinton nuclear power plant. The utility had set a deadline of early December to reach agreement on a bailout bill, or it would be forced to close the downstate facility.

Money for new solar development in Illinois will be pared as well.

The measure still will greatly expand financing and goals for construction of new wind and solar projects in Illinois, as well as utility-run programs to reduce energy consumption. And ComEd for the first time will be allowed to earn a return on the money it spends on energy-efficiency programs.

Rauner also won concessions on behalf of the state's largest industrial power users, exempting them from rate hikes to finance the energy-efficiency expansion.

FINAL IMPEDIMENT

The governor's resistance to the bill was seen as the last impediment to a deal that would keep two of Exelon's six nuclear plants in the state from closing prematurely. Exelon had set a deadline of early December to reach agreement on a bailout bill or it would be forced to close its Clinton plant downstate.

The company has agreed to keep the plants open for at least a decade under the legislation.

"While there is still a lot of work to be done, we are pleased to have an understanding with the governor's office and continue to work with the four (legislative) leaders and their professional staffs, as well as other stakeholders and the bill's more than 200 other supporters, to move this bill forward," Exelon said in a statement. "With today's progress, we are all one step closer to saving thousands of jobs in Illinois."

The agreement now appears to clear the way for quick passage. But, with budget negotiations between Rauner and House Speaker Michael Madigan still at a stalemate, lawmakers will have to vote for what in the end will be an electricity rate hike for all Illinoisans when there isn't yet a budget, the state is billions behind on bills it owes and a future tax hike is likely.

A Rauner spokesman didn't respond immediately to a request to comment.

Above is from:  http://www.chicagobusiness.com/article/20161130/NEWS11/161139988/rauner-exelon-deal-clears-way-for-nuke-bailout

Burritt Township farmer helps rally community against Great Lakes Basin railroad

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By Susan Vela
Staff writer

BURRITT TOWNSHIP — Farmer Lana Daly couldn’t sit, wait and watch for the Great Lakes Basin Transportation Inc. railroad to come through her property.

She became an activist soon after she learned train tracks might impose upon her family’s centennial farm of about 280 acres.

Daly, 56, helped organize an Oct. 18 informational meeting that drew hundreds of concerned residents to Winnebago High School.

They were upset with Great Lakes. It had announced that a section of its proposed railroad through Indiana, Illinois and Wisconsin would switch to Winnebago County from Boone County.

Daly urged them to stay informed and, if they opposed the plan, to write protest letters to the U.S. Surface Transportation Board, which must approve the project.

Her activism remains energetic. By day, she is an Auburn High School reading teacher with Rockford Public Schools. After hours, she connects with her fellow protesters, studies Great Lakes and tries to be as knowledgeable as she can to stop the railroad.

The activist has helped build a database of about 1,800 people who want to stay connected with the railroad protesters.

Whenever she can, she tells people the fight isn’t over even though the Winnebago County Board passed an ordinance opposing the railroad.

“It’s really heartwarming,” she said. “There are people in Boone County who are like, ‘No, we are going to help you fight this.’

“I’ve never been involved in this kind of a grassroots effort. I'm still responding emotionally. I guess the prospect of losing four generations of hard, honest work, regardless of how it's discussed, is disturbing. Multiply that by hundreds of farmers and it's purely disgusting."

She urges observers to like Facebook accounts created by Rock Against the Rail, which states “A Letter A Day Keeps Great Lakes Basin Away.” Daly wants followers to also like Facebook accounts created by BLOCK GLB Railroad and Winnebago County Against GLB Railroad.

“You have to be patient. There are so many people involved," Daly said. "We’ve got everybody engaged and ready to go forward. We have the ability to contact people and keep them informed."

Susan Vela: 815-987-1392; svela@rrstar.com; @susanvela

Above is from:  http://www.rrstar.com/news/20161130/slice-burritt-township-farmer-helps-rally-community-against-great-lakes-basin-railroad

Boone County dog lovers celebrate opening of new Animal Services building

 

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By Susan Vela
Staff writer

BELVIDERE — Stray, injured, abused or abandoned animals will find cushier quarters Monday when Boone County’s $1 million Animal Services building officially opens.

The 3,200-square-foot facility near the intersection of Squaw Prairie Road and McKinley Avenue has been years in the making.

More than 50 community members, along with some of their furry friends, stood outside the new facility today for a ribbon-cutting ceremony.

Voters approved a November 2014 referendum to raise about $800,000 through a property tax to help pay for construction. A $5 add-on fee for dog tags is helping pay for the difference.

“I look around and see so many people contributed and put forth the effort here,” Boone County Board Chairman Bob Walberg said. “We just want to thank everybody for the support and the effort. Obviously, it certainly turned out nice. This is a wonderful new building.”

The kennels have barriers to prevent canine rowdiness. The building has a consultation room, a receiving area for animals, an activity room and other amenities.

“It will be easier on me now that I don’t have to fix everything,” said Justin Unger, animal services officer. “It’ll be a much cozier home for the dogs.”

Boone County officials had hoped for an August opening. Unger said some electrical issues caused delays.

But now the community can say goodbye to the Appleton Road facility that has less than 1,500 square feet and is more than 60 years old. The county purchased the veterinary clinic in 2003.

Dogs were spending some nights among piles and pools of their own waste on cold, snowy nights when outdoor stall gates had to be closed. Indoor stalls didn’t have drainage systems.

“It needed to be torn down 20 years ago,” Belvidere resident Al Johnson said.

He donated some fencing for the Animal Services property.

“I’d just like to give back to the community,” he said.

Susan Vela: 815-987-1392; svela@rrstar.com; @susanvela

Above is from:  http://www.rrstar.com/news/20161130/boone-county-dog-lovers-celebrate-opening-of-new-animal-services-building

Friday, November 25, 2016

(

Factbox: The companies making money from Illinois’ unpaid bills

rs) - During a 10-month period starting in November 2015, four firms qualified by Illinois Governor Bruce Rauner’s administration purchased $1.12 billion in unpaid bills due scores of vendors providing critical goods and services. In return, the firms stood to pocket at least $118 million in state-funded late-payment penalties as of late September.

THE PAYMENTS

Firm Receivables acquired*  Late-payment penalty*

Vendor Assistance Program $707.2 million                $82.4 million       

Illinois Financing Partners  $275.4 million                   $18.6 million

Vendor Capital Finance LLC   $145 million                  $16.9 million

Payplant                     $475,330                        $39,530

*As of Sept. 28, 2016

Source: Illinois Department of Central Management Services

THE FIRMS

Vendor Assistance Program (VAP)

VAP’s February 2014 disclosure, its latest available, identifies six funding sources and 12 owners, including Citibank N.A. and the consulting firm owned by Democratic political strategist Patti Solis Doyle, Hillary Clinton's 2008 presidential campaign manager.

Another VAP investor listed on that document is Manchester Securities, which is owned by billionaire hedge fund manager Paul Singer and had a 4 percent stake. State records show Singer donated $250,000 to Rauner in September 2014, two months before Rauner's election and 14 months before the launch of the Rauner administration's Vendor Support Initiative.

Argentina dubbed an affiliated Singer-owned company a "vulture" investor for its hardball tactics in a decade-plus legal battle with the South American nation over defaulted sovereign debt. At one point, the Singer firm had an Argentine naval training vessel briefly impounded by Ghana in an attempt to extract money from Buenos Aires.

Illinois Financing Partners (IFP

)Illinois Financing Partners, LLC's involvement in the program is backed by a $500 million Bank of America commitment, according to an IFP filing with the state in April. IFP’s purchases have consisted entirely of overdue Health Alliance bills. The group's president, founder and majority investor is Lindsay Trittipoe, who holds a 58 percent stake in the company.

IFP's minority investors include former two-term Illinois Republican Governor Jim Edgar, who is IFP's board chairman, and former U.S. Representative Jerry Costello, an Illinois Democrat. Both hold 1 percent stakes in the company.

Vendor Capital Finance LLC

A February 2014 disclosure to Illinois, the most recent available, lists New York municipal finance consultant Le Chen as VCF's chief executive officer. LeRose, LLC, of which Chen is identified as the lone member in state business records, reported a 6 percent ownership stake in VCF. With a nearly 94 percent stake, VCF's largest owner was ER Illinois LLC, based at the same New York address as Richmond Hill Investment Co., LP, VCF's filing showed.

Payplant LLC

The Palo Alto, California-based firm was co-founded by Ronjon Nag, an inventor and smartphone pioneer, and Neerav Berry, a computer engineering expert and co-founder of a mobile app store platform acquired by Blackberry. A February 2014 filing with Illinois showed Nag and wife Sally Ann Rudd committing $5 million to Payplant with another $5 million coming from the Berry & Pandey Living Trust.

HOW IT WORKS

The program targets invoices from contractors providing vital state services 90 or more days overdue. To date, Illinois has designated a variety of vendors, including some that supply state employees and retirees with medical services, feed prison inmates and keep Illinois’ computer systems functioning.

The outside groups front unpaid vendors 90 percent of the face value of their receivables. Whenever Illinois eventually pays those bills, vendors keep the remaining 10 percent of what they are owed, then forward the balance and late-payment penalties to the lenders.

SOURCES: Illinois Department of Central Management Services

(Reporting by Dave McKinney; Editing by Daniel Bases and Tomasz Janowski)

Tuesday, November 22, 2016

PRESS RELEASE from Block GLB/Rock Against The Rail

 

  • Submitted by

    Mirjam Melin, Co-founder of Rock Against The Rail & Susan Sack,Co-founder of Block GLB Railroad

    8608 East Rye Drive 3799 East 7th Road

    Clinton, WI 53525 Mendota, IL 61342

    608-312-1512 815-910-9064

     

  • mirjammelin@gmail.com sack_susan@yahoo.com

    rockagainsttherail@gmail.com blockglbrailroad@gmail.com

    www.BlockGLBrailroad.com

    For Immediate Release Proposed Rail Responds to Federal Agency Request

    On September 9, 2016 the Surface Transportation Board requested additional information from

    Great Lakes Basin Transportation Inc. (GLBT) regarding the average number of trains per day

    forecasted for each segment, the anticipated average speed of the trains and the anticipated average

    train length for the proposed GLBT toll railroad.

    GLBT provided their answers on November 10, 2016 as requested by the STB.

    GLBT submitted train speeds based on maximum speeds allowed by freight type; intermodal 70

    mph,coal and grain 45-55 mph, Oil 45 mph, General Car loads 55 mph.

    The number of trains per day, their lengths and speeds vary and are broken down by sections based

    on railroad interchange points. At the northern end of the route, GLBT estimates that there will be

    1-2 trains per day in the first year of operation on the Rock County, WI segment. By year three,

    GLBT estimates there to be 3-8 trains per day on that segment. At the Rochelle area section mile

    marker164 estimates range from 4-8 trains per day the first year to 17 to 34 by the third year. At

    Earlville mile marker 140, an approximate midpoint, the first year estimates are 11-20 trains per

    day increasing to 56-86 the third year. Manteno mile marker 63 is the site of the proposed 1,500 acre

    rail port. It is estimated the Manteno to Lowell Indiana stretches would see 21-35 trains daily the

    first year increasing to 56-85 per day the third year.

    GLB advised information provided in regards to the number of trains per day forecasted is based on

    traffic projections based on Chicago Metropolitan Agency for Planning (CMAP) traffic maps.

    Opposition to the rail points out it is not based on information or assurances provided by any of the

    railroads (GLBT’s potential customers) which the proposed toll rail would intersect.

    It was earlier revealed two of the six Class I railroads, Union Pacific and Norfolk & Southern have

    publicly stated they have no interest in using the GLBT proposed rail. The remaining four Class I

    railroads have not publicly stated that they will use the proposed GLBT toll rail.

    GLB’s letter dated November 10, 2016, states the following; “The volume of traffic that would be

    carried on the proposed line, and thus GLBR’s forecast of that volume, depends on many factors.

    These include the level of economic activity when construction of the line is completed, the types and

    volumes of rail freight traffic which would be transiting through the Chicago area at that time, and

    the business decisions of GLBR's connecting railroads and their shippers.”

    Mirjam Melin Co-founder of a grassroots opposition group Rock the Rail noted, “From all publicly

    available information it seems that GLBT is building this rail purely on speculation and a ‘If you

    build it, they will come’ philosophy. This entrepreneurial way of thinking is admirable only if you

    gamble with your own or your investors assets but not if you risk assets of people who involuntarily

    have become part of your project”.

  • The proposed 3 state toll railroad has come under scrutiny with over 4,000 opposition statements

    being submitted to the federal Surface Transportation Board and thousands of citizens using social

    media and informational outreach meetings to unite and educate themselves.

    Susan Sack of Block GLB commented, “ GLB would require the taking of property via eminent

    domain and taxpayers might end up footing the bill. Transparency of finances and a detailed

    business plan including customers who have agreed to pay to use the line must be available to

    determine feasibility. Citizens and communities should not bear the burden of risk for a speculative

    project.”

    Many of the comments submitted to the STB have addressed concerns over the negative economic

    impact on communities and landowners, safety concerns, and environmental concerns. Submissions

    site a GLBT employee Mr. Pehta, market advisor, stating 90% of the ‘privately financed’ rail line

    would be paid for by federal railroad grants raising the question; If this project would go bankrupt

    who would be stuck with the debt? http://www.eenews.net/stories/1059996700

    Carl Zimmerman, Earlville area farmer and co founder of Block GLB expressed disappointment

    upon reading the data submitted. “GLB did not provide answers as to who is going to pay to ship

    freight on the proposed rail or even what types of freight: oil, coal, grain, or intermodal, would be

    traveling through our communities. All that was provided was a disclaimer that the data provided

    was a guess as there were many variables.”

    The STB has provided GLB with a late Nov. deadline for an additional information request.

    Other GLBT news

    In a telephone conversation on November 10, 2016, Surface Transportation Board's Office of

    Environmental Analysis project manager Ken Blodgett confirmed that any letters written re Docket

    # 35952 (the proposed GLBT rail) will be processed, entered into the Public Record and considered in

    writing the Draft Scope of Study and the Draft Environmental Impact Statement (EIS). He stated

    that the public should be assured that their comments would be considered and he encouraged the

    public to write. Mr. Blodgett acknowledged the public’s frustration with the complicity of the

    approval process. Aside from this, he also acknowledged that the people in Washington DC were

    unfamiliar with the complexities of farming and the impacts the proposed rail would have.

    John Hintzsche, AG instructor and Ogle County farmer noted, “The fact the people making the

    decisions admittedly know little about Midwest farming operations should be a reason for those in

    the farming community to provide detailed descriptions of their operations and the negative impacts

    the proposed rail would have. People 30 miles each side of the proposed route should by submitting.”

    The STB’s Office of Environmental Analysis (OEA) will update the public once a range of reasonable

    alternatives has been defined and will invite comment from the public on those alternatives prior to

    issuing the Final Scope of Study. Mr. Blodgett indicated that the writing of the Draft Scope of Study

    (the outline of what will be studied and considered in the Draft EIS) might take several months yet.

    It would likely be early 2017, he stated, when the next official Public Comment period would open.

  • It is important for the public to be aware that the STB has stated the following; “As part of our

    environmental review process, we will identify and evaluate any reasonable and feasible alternative

    routes to the proposed rail line route shown on the map. We anticipate that any such alternative

    routes would likely be located within approximately 30 miles of the proposed rail line.

    Thus, the project area consists of a 60-mile wide corridor (i.e., 30 miles on either side of the

    proposed rail line).” (emphasis added)

    For additional information or to fact check:

    Click on the Documents and Related Links tab at www.greatlakesbasinraileis.com and look

    under Information Requests for the complete November 10, 2016 GLBT response.

    www.BlockGLBrailroad.com and the linked county face book pages or

    www.winnebagoboonefarmbureau.org/great-lakes-basin-rail.

Monday, November 21, 2016