OT: Caterpillar threatening to leave Illinois!

[Beninator]

Is the CEO still Jim Owens?

The current CEO is Doug Oberhelman.

[Beninator]

One thing that I find curious with the talk on here of tax incentives and companies moving overseas, is that last Fall, a bill was introduced in the Senate that would have used the tax code to punish corporations for moving jobs overseas, and provide TAX INCENTIVES for companies to bring back jobs to the US! You will see with my links below what party was mostly responsible for blocking this bill, but, IMO, this should be a bill that BOTH sides of the aisle work on together.

http://www.cbsnews.com/8301-503544_162-20017896-503544.html

"Current tax law allows companies to benefit in a variety of ways when they move jobs overseas, including deducting the costs of closing American plants. The proposed bill would have raised taxes on companies that move manufacturing jobs out of the country and provide a tax incentive for companies that decide to bring them back."

http://www.npr.org/templates/story/story.php?storyId=130194257

" On the Senate floor, Michigan Democrat Debbie Stabenow urged her colleagues to abolish the kinds of tax incentives that benefited refrigerator-maker Electrolux. They closed down a Michigan plant a few years ago then moved production to Mexico."

[Grassman]

Caterpillar has a market cap of 70 billion dollars. Paying taxes is part of your civic duty to better society as a whole. In fact, CAT is worth 25% more now than it was during the HEIGHT of the housing bubble. When super rich corporations/individuals complain about a tiny percentage of their income, it sickens me. Caterpillar made 42.6 BILLION dollars in 2010. They're complaining about 0.0009% of last years earnings. This amount does not hurt them in any way shape or form. It is all a show. Our government needs to get tough on corporate greed.

Open your wallet. Does it have ANY money in it? That's more than a lot of billion dollar corporations pay in taxes. We need to wake up and realize that half of the reason our country is in the deficit we have is because corporations are grossly taking advantage of tax loopholes.

Its already disgusting that I pay half of the taxes as most everyone I know. And I will happily (and greedily) pay as little in to the system as possible until it is fixed. But it needs to be fixed. Across the board. Don't get mad at the state of Illinois. Get mad at the disgusting greed of Caterpillar.

Those darn companies that make money. Shame on them, a pox on their house!
Certainly glad you are not Govenor!

[bu fan 9]

I agree Grassman.

[ser_solace]

I don't blame CAT if it chose to move. I don't think it likely as I do believe something will be worked out. However, Illinois's tax increase was monumentally stupid, especially considering we're just coming off of (hopefully) the bottom of a recession.

This, I believe, is not strictly a matter of CAT paying Illinois taxes as I believe a portion of their earnings is considered taxable within Illinois. Not sure myself of the split. However, who would want to come to Illinois and work at CAT with the crazy high taxes? That's a key problem.

To keep it BU relevant, if a BU student were presented options of equally paying jobs in Illinois (like CAT) and one out of state with significantly lower taxes, which would he/she choose?

I recently moved back to Illinois from Florida. And it's shocking how badly taxed Illinois is. It seems property tax is nearly twice as much as Florida (surprisingly) AND Florida has no state income tax.

As one of the posters mentioned, paying taxes is a civic duty. Sure. BUT if those tax revenues are badly mismanaged, what will raising taxes do but throw more money down the drain?

To keep on topic with BU, how bad those this tax hike affect a potential out-of-state coaching candidate's decision? High income and property tax? A $700K salary is not going to be equal everywhere.

[Canton BU fan]

Caterpillar has a market cap of 70 billion dollars. Paying taxes is part of your civic duty to better society as a whole. In fact, CAT is worth 25% more now than it was during the HEIGHT of the housing bubble. When super rich corporations/individuals complain about a tiny percentage of their income, it sickens me. Caterpillar made 42.6 BILLION dollars in 2010. They're complaining about 0.0009% of last years earnings. This amount does not hurt them in any way shape or form. It is all a show. Our government needs to get tough on corporate greed.

Open your wallet. Does it have ANY money in it? That's more than a lot of billion dollar corporations pay in taxes. We need to wake up and realize that half of the reason our country is in the deficit we have is because corporations are grossly taking advantage of tax loopholes.

Its already disgusting that I pay half of the taxes as most everyone I know. And I will happily (and greedily) pay as little in to the system as possible until it is fixed. But it needs to be fixed. Across the board. Don't get mad at the state of Illinois. Get mad at the disgusting greed of Caterpillar.

I would suggest not posting when you've been drinking.

[tornado]

John Stossel just did a piece on how GE has avoided paying any federal taxes for the past couple years -- and it's tied directly to the fact that CEO of GE, Jeff Immelt has some shady dealings with the feds, and is close friends with and a strong supporter and donor to the current president.
Not too coincidentally -- msnbc - which is practically a PR firm for the far left -- owned by GE!!

http://www.foxnews.com/opinion/2011/03/24/john-stossel-ge-obama-cozy-government-business-handing-favors-folks-connections/

Some would argue that the government is better off taxing the use or purchsed of things -- not the production of them or taxes by nature will inhibit production and thus stymie the economy.
Why in the world would you want to inhibit productivity? Tax the things that are counterproductive!! Levy BIG taxes on alcohol, tobacco, prostitution, bars, strip joints, gambling, etc.....funny how the people in those industries are thriving like crazy while people in manufacturing industries are closing shop and selling to China.

Then -- when a poor person goes to buy something they absolutely NEED...like baby formula or clothing...that it is made efficiently in the US with few taxes and it can be sold cheaply.
But if they want to go play on the Par-a-dice, drink whiskey, or smoke cigarettes where no real wealth or benefit is produced - but more likely harm and ruined lives.....then they pay big time which might just be a deterrent...

[amckillip]

The notion that it's Illinois' law that is driving Caterpillar and other companies overseas is hilarious, it has nothing to do with laws and like the tax and everything to do with the cost of wages. The $40 million Cat has to pay in taxes pales in comparison to the billions that they save in wages when the move to another country.

It is also laughable to say that Cat can't attract talent to Illinois due to the income tax here. Cat has hundreds of applicants for every one position that they post right now - attracting talent is not an issue, this I can attest to personally.

You can disagree fundamentally with the law change, and I fully respect that. But 40 million dollars driving a move out of state is not realistic at all. So many more costs would arise from moving, for instance the vast majority of CAT's supplier base is in IL, moving away from that would easily offset the 40 mil in taxes by drastically increases supply chain costs.

[Beninator]

John Stossel just did a piece on how GE has avoided paying any federal taxes for the past couple years -- and it's tied directly to the fact that CEO of GE, Jeff Immelt has some shady dealings with the feds, and is close friends with and a strong supporter and donor to the current president.
Not too coincidentally -- msnbc - which is practically a PR firm for the far left -- owned by GE!!

http://www.foxnews.com/opinion/2011/03/24/john-stossel-ge-obama-cozy-government-business-handing-favors-folks-connections/

Some would argue that the government is better off taxing the use or purchsed of things -- not the production of them or taxes by nature will inhibit production and thus stymie the economy.
Why in the world would you want to inhibit productivity? Tax the things that are counterproductive!! Levy BIG taxes on alcohol, tobacco, prostitution, bars, strip joints, gambling, etc.....funny how the people in those industries are thriving like crazy while people in manufacturing industries are closing shop and selling to China.

Then -- when a poor person goes to buy something they absolutely NEED...like baby formula or clothing...that it is made efficiently in the US with few taxes and it can be sold cheaply.
But if they want to go play on the Par-a-dice, drink whiskey, or smoke cigarettes where no real wealth or benefit is produced - but more likely harm and ruined lives.....then they pay big time which might just be a deterrent...

Why not simply roll back the Bush tax cuts for those making $250k per year or higher?

[tornado]

I have no problem with taxing the wealthy -- but again -- you are targeting the most successful who generally use their income to start or expand businesses and hire more...

remember -- those taxes are on income not wealth -- the people with the most wealth...
the Kennedy's, George Soros, many Hollywood elite, etc...are all liberal and they know their huge stockpiles of $$ already in the bank won't be hurt...

[Beninator]

I have no problem with taxing the wealthy -- but again -- you are targeting the most successful who generally use their income to start or expand businesses and hire more...

But we are only talking about going back to the Clinton tax levels which is about a 3% difference. Certainly not enough of an increase on the top level tax payer that will affect hiring etc.

[thefish7]

for instance the vast majority of CAT's supplier base is in IL, .

This is absolutely not the case.

[AZ BU Fan]

This is an interesting story, as it is so multifaceted.....It isn't as easy as just union wages or corporate greed. From my 33 year career experiences with Caterpillar:

1. The recent ILL tax increase is part of the concern for Cat who have to answer to a Board and Shareholders (not Ill, or Peoria) to maximize profits under existing laws. $40M in savings is $40M. My guess is the remaining large debt of Illinois, with unaddressed underfunded pensions, is a major concern to the company. The absence of tough budget realignment vs tax increases could be Cat's bigger concern. When will tax increases stop vs the tougher decisions Quinn and the State Gov still have to face?

2. Corporate taxes are one thing, but personal income tax increases do affect Cat's ability to hire/retain world class employees. Having lots of job applicants for open positions is one thing, getting world class talent to join/stay with Cat is another....these people do have choices where the work and live. ILL taxes, Pia/Pia County taxes, Pia crime, Peoria school system problems, a totally ineffective Pia City Government can all affect Cat's ability to hire/retain top management talent.

3. Direct labor costs for Caterpillar are one thing, but I believe more importantly are employee productivity, flexible work rules, ability to promote talent vs just employee tenure, eliminating the cost to CAT of costly union management overhead, frivolous employee grievances, have a bigger affect on Cat profit. This is why a non union workforce can be attractive. Moving one union employee today to a different job classification results in a costly chain reaction of labor job moves that is costly to a company and can be disruptive to productivity/quality.

4. Moving jobs overseas vs continuing them in the US has as much to do with: Cat access to markets where countrys' govs require local sourcing/production/employment, the transportation/tariff costs to export vs local country production, the fact that future markets in Russia, India, China etc will dwarf North America, the ever changing dollar to local currency exchange rates, supply chain costs if everything has to be exported from a US base, factor as much or more into sourcing decisions than direct labor costs. Cat sourcing also has to deal with what their competitors are doing with their production locations.

[Bravesfan]

Caterpillar has a market cap of 70 billion dollars. Paying taxes is part of your civic duty to better society as a whole. In fact, CAT is worth 25% more now than it was during the HEIGHT of the housing bubble. When super rich corporations/individuals complain about a tiny percentage of their income, it sickens me. Caterpillar made 42.6 BILLION dollars in 2010. They're complaining about 0.0009% of last years earnings. This amount does not hurt them in any way shape or form. It is all a show. Our government needs to get tough on corporate greed.

Open your wallet. Does it have ANY money in it? That's more than a lot of billion dollar corporations pay in taxes. We need to wake up and realize that half of the reason our country is in the deficit we have is because corporations are grossly taking advantage of tax loopholes.

Its already disgusting that I pay half of the taxes as most everyone I know. And I will happily (and greedily) pay as little in to the system as possible until it is fixed. But it needs to be fixed. Across the board. Don't get mad at the state of Illinois. Get mad at the disgusting greed of Caterpillar.

I'm sorry. I don't know how old you are, but you have NO clue about how a business works! I have an Engineering degree, but a lot of what my company does surrounds finding clients for us to work with. If they have to pay higher taxes, the number of our clients drop and we lose money as well. This is not that difficult of a concept to grasp.

And here we have a Governor who claims this 67% tax increase will generate $7 billion to offset state debt, and then he has the nerve to turn around and ask for another $8.4 billion to borrow! I mean when does this insanity end?! You run a business like that and you, your children, your grandchildren, and your great grandchildren will be paying for this forever!

Sorry to be so blunt with you, but this is the hard truth. Just because Caterpillar is making a mint now doesn't mean a huge tax increase will help them in the future. You can kiss goodbye employee bonuses, new clients, research and development, and numerous other services that Caterpillar provides, even if they still do make some money.

Sometimes how much money a company makes is as important as making any money at all.

[Bravesfan]

And this isn't a threat that Pat Quinn should just blow off as an empty threat like he did yesterday-
Quinn: "Caterpillar's not leaving Illinois"

http://abclocal.go.com/wls/story?section=news/local&id=8036143

There have already been major businesses leave Illinois for more favorable business environments in other states, and companies like Caterpillar have already shifted major portions of their businesses to other states. Today, there are more than 20,000 fewer jobs in Peoria than there were at the time of the 1992 strike, and more than 40,000 fewer than at Cat's peak in the 1970's. Much of that decline is due to shifting jobs to other states, and outside the US. Caterpillar still employs a total of about 100,000 people, but half of them are outside the US. and the majority of it's US workers are now located in states other than Illinois due to more favorable business environments-
Caterpillar now has manufacturing facilities located in Clayton North Carolina, Sanford North Carolina, Greenville South Carolina, Corinth Mississippi, Dyersburg Tennessee, Griffin Georgia, LaGrange Texas, Seguin Texas, and North Little Rock Arkansas. You can thank the tax and pro-labor environment of the state of Illinois (plus the UAW) for that.

Yeah, and I didn't even realize this! So it's already gotten worse in Peoria because of the state's ineptitude over the years! Not good, but Caterpillar leaving all together will just succeed in sticking a fork in Peoria, no way around that!