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Working In These Times

Thursday, Dec 8, 2011, 1:22 pm

Amid Fruitless Corporate Tax Breaks, Gov. Walker Grows Unpopular

BY Roger Bybee

"Pay for Performance - Fire Scott Walker" reads a recall campaigner's sign on November 19, 2011 in Madison, Wis.   (Photo: Sue Peacock on Flickr)

Surveying the wide array of new tax breaks heaped upon corporations and the richest 1 percent in Wisconsin by Scott Walker, coupled with proposals for environmental deregulation to facilitate iron-ore mining in a pristine area of the state, State Rep. Fred Clark (D-Baraboo) snapped in September, “That's not a jobs plan, that's a corporate profit plan.”

Since Walker took office in January, the state's GOP-dominated legislature has approved $1.6 billion in corporate tax breaks over the next 10 years, including: $874 million for manufacturing and agricultural companies; $366 million specifically targeted to multi-state corporations; and $334 million for a new-hires write-off.

Clark’s comment marks a long overdue—and hopefully lasting—break for Democrats from the bipartisan consensus on corporate tax breaks of the past four decades. Like Republicans, Democrats have generally been willing to cut corporate taxes to retain and attract manufacturing jobs.

But Wisconsin citizens are growing increasing restive about the shortage of good jobs in the state. Between October 2010 and October 2011, Wisconsin added only 5,500 nonfarm jobs, according to the Labor Department. The strategy of corporate tax breaks can hardly be depicted as motivating the “job creators” at Briggs & Stratton, Rockwell, Master Lock, Badger Meter and Johnson Controls, which have transferred tens of thousands of jobs to Mexico and China.

The October issue of the Who Does Not Pay Taxes? newsletter published by the Institute for Wisconsin's Future (IWF) spotlights four major firms that have benefited from the taxes contributed by hard-working families whose jobs have been disappearing and wages have been falling—by nearly 22 percent, in the case of Milwaukee.

The firms include: Kimberly-Clark, the paper-products giant; Brunswick, owner of Mercury Marine in Fond du Lac, which pushed vast concessions on its workers by threatening to relocate; Snap-on, the Kenosha auto-tool firm; and Rockwell Automation, descendant of Allen-Bradley, a Milwaukee industrial icon, which ended the last of 5,500  production jobs in the city in 2010.

$29 BILLION IN PROFITS TAXED AT .001%

As IWF revealed:

In the last decade, these four companies have made nearly $29 billion in pretax profits, and paid a total of only 0.01% of that in Wisconsin income tax. And while CEO compensation tripled, the average working wage remained flat.

IWF research director Jack Norman said that the tax breaks mean less revenue for public education, where Walker imposed some of the biggest cuts in public education. Not only have the tax breaks failed to create jobs, they have constituted an enormous drain on state tax revenues needed to modernize schools, reduce class size, hold down tuition at state universities and provide openings at the state’s technical colleges, all crucial issues given that discarded workers desperately seek new careers.

Tax breaks also destroy public confidence in the tax system. Taxes are fundamentally based on an honor system, and every tax return can’t be audited.

Yet Scott Walker is continuing to give Wisconsin corporations with more tax breaks, in the name of generating 250,000 jobs by—as he originally planned it—the end of his four-year term in 2016. Some of the corporate tax breaks will be snowballing in their effect: “Walker’s plan for the elimination of corporate income taxes on all Wisconsin manufacturing and agricultural processing over the next five years will be “extraordinary in its impact,”  Norman told In These Times.

But when faced with a choice between making the governor look good by increasing jobs or boosting already-substantial profits, Walker’s corporate allies invariably opt for the higher profits to be found in Mexico and China over making Walker look good. Earlier this year, GE moved its headquarters for its medical equipment division from Waukesha, Wis., to Shanghai. The Thermo-Fisher Corporation is planning to move almost all of the 1,100 jobs it once had in Wisconsin to Mexico. C&D Engineering is also threatening a move to Mexico.

Faced with these events and dismal data, Walker has resorted to distorting figures purported showing job growth. The Milwaukee Journal Sentinel, which endorsed Walker and has been generally supportive of him, reported this week:


Announcing the best job numbers of his tenure with a splash last summer, Gov. Scott Walker left out the fact that his office had been told in an internal report that the monthly numbers were "very questionable" and "suspect."

The snapshot of jobs in the state is normally announced each month simply through a news release, but in July Walker traveled to Milwaukee to announce that the month before the state had gained a net total of 9,500 jobs, a big chunk of the net total of 18,000 new jobs nationwide for that month. It was announced at the time as the biggest monthly increase in jobs since September 2003…

[However], in every month since June, the state has lost jobs both overall and in the private sector...

In fact, Walker’s Wisconsin is actually at the bottom in the most recent study:

Wisconsin posted the nation's biggest payroll losses, with employment dropping by 9,700 jobs in October compared with September, according to a U.S. Bureau of Labor Statistics report …

58% BACK WALKER RECALL

All of this may have something to do with the fact that the governor’s popularity has been plummeting. The most recent poll by St. Norbert’s College showed a stunning 58 precent level of support for recalling Walker, up from 47 percent in April. (There are also recall petitions circulating against Lieutenant Gov. Rebecca Kleifisch and four GOP state senators). As previously reported, the United Wisconsin coalition compiled more than 300,000 signatures on petitions calling for Walker’s recall; about 540,00 are needed to trigger a new election next year.

Most strikingly, Republican support for Walker has suddenly started melting away. As a FOX TV station reported:

The poll also examined Republican support for a recall, and says the numbers have more than tripled - they're now at 24 percent, up from only 7 percent in the spring. The poll indicates almost universal recall support from Democrats, with numbers around 90 percent.

The combination of Walker’s attack on fundamental public-worker rights and his willingness to enrich corporations through tax breaks, coupled with ongoing misery for working families—wage cuts, layoffs, and home foreclosures—is starting to look more and more like a formula for Walker’s political demise.

Roger Bybee is a Milwaukee-based freelance writer and University of Illinois visiting professor in Labor Education. Roger's work has appeared in numerous national publications, including Z magazine, Dollars & Sense, The Progressive, Progressive Populist, Huffington Post, The American Prospect, Yes! and Foreign Policy in Focus. More of his work can be found at zcommunications.org/zspace/rogerdbybee.

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