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Posted by Barton Lorimor
A leaked letter from Caterpillar CEO Doug Oberhelman to Gov. Pat Quinn about the manufacturing giant being courted to leave Illinois certainly made its way around over the weekend. But a CAT spokesperson told ABC 7 that was the last thing they wanted to happen…
The correspondence says at least four states have approached the company about moving since Illinois raised its income tax in January.
But nothing is written in stone and a spokesperson for Caterpillar says the letter, which they say they did not intend to be made public, was only an attempt to open a dialogue and certainly not a threat.
But in the very next paragraph of the story…
Caterpillar officials say if Illinois doesn’t shape up its business climate, the heavy equipment maker may have to ship out.
You got me.
* Also over the weekend….
llinois Gov. Pat Quinn and the premier of Manitoba, Canada, have signed an agreement to work together on trade and commerce opportunities. Quinn and Premier Greg Selinger signed the memorandum of understanding Saturday in Chicago.
The agreement means the two governments will work together to increase collaboration in industries including manufacturing, renewable energy and information technologies. They’ll also work together on trade and tourism opportunities.
Somewhat related…
* Sweeny: FatWallet goes north; charter schools attacked
* High-speed rail benefits have hollow ring
posted by Rich Miller
Monday, Mar 28, 11 @ 7:40 am
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Let’s remind readers the great State of Nebraska already has higher indy and biz that rates. plus Warren Buffet owns every thing so CAT would have to sell to him.
And if CAT moved who would Aaron Shock have to boot lick?
Comment by CircularFiringSquad Monday, Mar 28, 11 @ 8:11 am
I think the Caterpillar letter is probably more about wanting to get in on the game over workmen’s comp changes more than anything else.
And maybe some undisclosed corporate handout.
They’re an exporter; they don’t pay state corporate income taxes on goods they sell out of state. It’s been shown in the past that there have been years they haven’t paid state income taxes at all.
The letter sure got the ignorati riled up.
Comment by wordslinger Monday, Mar 28, 11 @ 8:16 am
I think the Caterpillar letter is probably more about wanting to get in on the game over workmen’s comp changes more than anything else.
And maybe some undisclosed corporate handout.
They’re an exporter; they don’t pay state corporate income taxes on goods they sell out of state. It’s been shown in the past that there have been years they haven’t paid state income taxes at all.
The letter sure got the ignorati riled up.
Comment by wordslinger Monday, Mar 28, 11 @ 8:16 am
If you didn’t want it leaked why put it in writing?
Comment by Leave a light on George Monday, Mar 28, 11 @ 8:40 am
Tourism? In Manitoba? Yeah, right. Gov. Quinn why don’t you strike a “trade deal” with Macedonia and Upper Volta while your at it.
Comment by Conservative Republican Monday, Mar 28, 11 @ 8:48 am
Cat has already moved a lot of its operations not just out of state, but out of the country. So even a state tax rate of ZERO won’t keep them here.
Sounds to me like a shakedown and/or an excuse to do what they’ve been planning anyway.
Comment by just sayin' Monday, Mar 28, 11 @ 8:57 am
Definitely a shakedown ploy. I understand that’s how the game is played, so I don’t blame them. But the frisson that’s rippling through the right wing is a bit ridiculous.
Comment by soccermom Monday, Mar 28, 11 @ 9:54 am
Groupon got state money, US Cellular got state money, why not Caterpillar?
Comment by Harley Race Monday, Mar 28, 11 @ 9:57 am
never write down what you can whisper. Yeah, the letter was never mean to be public. ha.
Comment by frustrated GOP Monday, Mar 28, 11 @ 10:09 am
Well workers comp does need to be fixed. What is amazing is that Lisa madigans office is supposed to represent the states interests in these workers comp hearings and are instead part of the problem. Lisa loves having a photo op at nursing homes but apparently doesn’t much care for the actual work of being attorney general. What has been going on isnfraud and abuse that is just ignored by madigan.
Comment by Fed up Monday, Mar 28, 11 @ 10:13 am
I used to live in Peoria and as far back as I can remember, Cat has periodically made threats or at least dropped hints that it would either close various plants or move out of Peoria completely if it didn’t get some concession it wanted. Most recently they were hinting they might want to move if area voters didn’t approve the riverfront museum referendum (so that Cat could include a facility devoted to its history in said museum). Bowing to the Big Yellow God is nothing new.
Comment by Secret Square Monday, Mar 28, 11 @ 10:16 am
Harley, it’s just bad manners to complain about state taxes (which the company doesn’t always pay) and then ask for a handout.
Don’t pretend to be engaging in some deep philosophical discussion. Just ask for the handout. They’ll get it.
Comment by wordslinger Monday, Mar 28, 11 @ 10:20 am
–Most recently they were hinting they might want to move if area voters didn’t approve the riverfront museum referendum (so that Cat could include a facility devoted to its history in said museum).–
Seriously? Did they threaten to hold their breath until they turn purple, too.
Comment by wordslinger Monday, Mar 28, 11 @ 10:22 am
The register star article mentioned Q has done nothing towards the $13bln deficit, but I’m pretty sure the income tax increase will cover about half of that. No?
Comment by Precinct Captain Monday, Mar 28, 11 @ 10:29 am
“Seriously? Did they threaten to hold their breath until they turn purple too?”
Well, they didn’t come right out and SAY so but they kinda sorta hinted they might think about it. That has happened more than once.
Comment by Secret Square Monday, Mar 28, 11 @ 10:46 am
“Cat has periodically made threats or at least dropped hints that it would either close various plants or move out of Peoria completely if it didn’t get some concession it wanted”
Might you be referring to the new, $500 million plant CAT is building in Texas? We voters in Illinois must get our heads out of the collective sand and accept the fact that jobs, like cpaital, are mobile. And employers like CAT will create more kobs outside of Illinois if we continue down the economic path we are on.
Comment by GoldCoastConservative Monday, Mar 28, 11 @ 11:07 am
Quinn has a plan. He is secretly discussing a pincer like attack on Wisconsin. He thought Manitoba was north of Wisconsin and was deep into discussion before he realized he should be talking to Ontario.
Comment by Irish Monday, Mar 28, 11 @ 11:09 am
I wonder if this has anything to do with the top cat brass meeting with their accountants for their personal income taxes. This is the same company that made all employees turn in their airline miles and one of the first to throw off spouses off the health insurance. I understand negociations, but there is also an arguement for being a good citizen too. The money they extort from the state could be going to improving the workforce of the state, instead of bonuses for CEO, etc.
Comment by frustrated GOP Monday, Mar 28, 11 @ 11:12 am
Those posting here taking the attitude of “good riddance” to Cat are thinking outside of logic. The very LAST THING this State needs is it’s largest private sector employer and manufacturer leaving. This is not a shakedown. It’s closer to a cold bucket of water in Quinn’s/Madigan’s/Cullerton’s collective lap. Whether or not the letter was leaked intentionally is irrelevant. To think that the political leaders can continue with the status quo and everything will be fine is ludicrous. Cat is indeed an incredibly successful international company with plants all over the planet. Why would we risk them moving their headquarters and numerous Illinois facilities and workers out of state?
Comment by Bitterman Monday, Mar 28, 11 @ 11:22 am
GoldCoaster…please use spell check…Cat is more self-important than important. The next “leaked” letter will involve the falling school testing scores…just as soon as Cat’s sigificant property tax appeals are decided. Companies the size of Cat will always take more than they give…that’s the formula…and the math is the same everywhere.
Comment by nothing's easy Monday, Mar 28, 11 @ 11:40 am
If we give a handout to Caterpillar, how much of a handout can Navistar expect?
We better not forget about Ford, either.
Comment by Leroy Monday, Mar 28, 11 @ 11:48 am
Well, FatWallet is making good on its promise to leave after the “Amazon” tax. I wonder who’s next? What a dumb idea it was to kneecap one of this state’s only growing industries. Just like Illinois to care about the buggy-whip factory while the cutting edge jobs vote with their feet . ..
Comment by Watch 'Em Go Monday, Mar 28, 11 @ 12:07 pm
All these tax break deals to keep corporations in state and all the whining from corps about US corp taxes just make me sick. CEOs making millions and benefiting from US laws, but skulking away w/ off shore subsidiaries and bank accounts so they don’t pay US taxes. And this is the free market that is so highly praised. Comes across as no better than the robber barons of old.
Comment by D.P. Gumby Monday, Mar 28, 11 @ 12:35 pm
I’ve been to Manitoba. It’s a pretty cool place!
Comment by Leave a light on George Monday, Mar 28, 11 @ 12:36 pm
Crossposted:
- Cincinnatus - Monday, Mar 28, 11 @ 12:48 pm:
wordslinger,
Last year, Cat paid $48M in state and local taxes. With the increased tax imposed by Quinn and the Democrats, Cat’s tax obligation rises to $60M.
Comment by Cincinnatus Monday, Mar 28, 11 @ 12:49 pm
Cat also reported 2010 profits of apx. $2.7 billion (a %202 increase), including a big 4th quarter in which profits quadrupled. Clearly this current business enviornment is unsustainable for growth. I blame the unions…
Comment by anon Monday, Mar 28, 11 @ 1:05 pm
- anon - Monday, Mar 28, 11 @ 1:05 pm:
“Cat also reported 2010 profits of apx. $2.7 billion (a %202 increase), including a big 4th quarter in which profits quadrupled.”
This is on global sales of $42.6B which is slightly over 6% profit. Cat increased it workforce by 19k people. And it shouldn’t surprise anyone that their profit was up 202% from 2009, when the recession was still ongoing.
So what was your point, exactly?
Comment by Cincinnatus Monday, Mar 28, 11 @ 1:20 pm
Quinn,Madigan,and Cullerton touching workers comp.
I don’t think so. It might offend some union God
forbid. Worker Comp to this group is the 3rd rail.
Our businesses in this state need relief from exorbitant worker comp. Billing on a per $100.00 of pay is nuts. We should pay for hours worked. Our present law is a job killer.
Comment by mokenavince Monday, Mar 28, 11 @ 1:21 pm
Cincy, I certainly appreciate your blogs. You are always well informed and right on.
Comment by Truth Seeker Monday, Mar 28, 11 @ 1:38 pm
Mokenavince,
OK, play the other side. You think the GOP is rushing to rollback the sweetheart reimbursement rates the GOP-friendly doctors get from workers comp cases? Sorry biz community, docs win out in this intramural fight. Workers comp pits the GOP interests against each other as much as it does the Dems.
Comment by piling on Monday, Mar 28, 11 @ 1:44 pm
Not to agree with Cinci, but Cat’s profits were about $270 million after taxes in 2010, not $2 billion as anon wrote.
Now we all know that companies like Cat hire the best accountants to ensure that they have the lowest possible tax liability. That’s perfectly legal and part of a great American tradition of dodging responsibility to pay our fair share. In its press release on the 2010 results, they noted that they paid $2 million more in 2010 state/local taxes due to something about geographic locations, which I assumed means that at least one of the states they operate in, not IL, raised taxes on them.
Still and all, $280 million in profit tells me they aren’t on the ropes just yet. Especially considering the market for large construction equipment these past two years. Sure looks like Cat has weathered the storm. Can Peoria say the same?
Comment by 47th Ward Monday, Mar 28, 11 @ 1:53 pm
Why is this a big deal?
As I’ve written several times before, we have lots of high net worth individuals leaving the state already. The only difference between they and Cat, is that they didn’t write a letter to the Governor before their departure.
Comment by Downstate Monday, Mar 28, 11 @ 2:06 pm
- 47th Ward - Monday, Mar 28, 11 @ 1:53 pm:
“Not to agree with Cinci, but…”
Marking my calendar now, 47th! And glad to see you aren’t in the hoosegow because of the fighting over there at Democratic Headquarters.
;-{)>
Comment by Cincinnatus Monday, Mar 28, 11 @ 2:40 pm
I love how all the critics on this web site sneer at threats like the one made by Cat. Just keep sneering as the state’s business climate continues to deteriorate. Illinois is behind the eight-ball in a lot of categories and will continue to be so until the state addresses tax issues, workers’ comp issues, education issues — the whole ball of wax. By the way, compare how many employees Cat had in Illinois 30 years ago and how many it has now. they’ve been moving out for a long time and they’ll keep going if no one in charge gets smart. So keep sneering as you keep watching life in Illinois go downhill.
Comment by Jim Monday, Mar 28, 11 @ 2:46 pm
“…as life in Illinois goes downhill?!” Has anyone been to Wisconsin, Indiana, Missouri, Nebraska, New Jersey or South Dakota? All are great places to vacation and “get away” (except for perhaps New Jersey). These are not exactly bastions of recruiting assets. Does anyone really believe blue chip engineers, IT personnel, MBAs and their families dream of being hired to one of those centers of high culture? This argument that Illinois is going “downhill” is ridiculous. Downhill compared to what?
Comment by nothing's easy Monday, Mar 28, 11 @ 3:27 pm
–By the way, compare how many employees Cat had in Illinois 30 years ago and how many it has now. they’ve been moving out for a long time and they’ll keep going if no one in charge gets smart–
Jim, in the 80s, I spent about two years doing virtually nothing but covering mass layoffs and strikes in the heavy equipment industry in Iowa and Illinois.
No one from Cat, Deere, JI Case or Harvester gave a hoot about state corporate incomes taxes or state government for that matter.
They were all on the ropes then and the three culprits in their minds were lack of international demand, dumping by Komatsu and the UAW.
CAT’s a big-time corporate citizen, they’ll be listened to and they’ll get at least what Ford, Navistar and Mitsubishi got.
And I’m betting, after many decades, they’re going to get some traction on workmen’s comp. The revelations by the BND of abuse in the public sector have made it more possible than ever before.
Comment by wordslinger Monday, Mar 28, 11 @ 3:39 pm
Those greedy businesses, all they do is suck up taxpayer dollars and look for handouts. It doesn’t matter if they want to leave, let them. If they don’t understand Illinois is a good place to live, then they just don’t get it.
All of those other states who are coming in here to steal our businesses away have it all wrong. We in Illinois are apparently the only ones who know we ARE good for business. Stupid other states don’t get it. Rick Perry, Chris Christie, Walker, all of them are just uninformed fools and wrong.
If all of our businesses would just leave, we would be so much better off. SNARK
Comment by Old Milwaukee Monday, Mar 28, 11 @ 3:46 pm
The more I think about it, CAT was probably wondering when the state would get around to them after the deals with Ford, Navistar and Mitsubishi. Squeaky wheel gets the grease, and CAT will get a comparable deal or better.
The CAT chair’s letter doesn’t mention state taxes at all, by the way.
Comment by wordslinger Monday, Mar 28, 11 @ 3:53 pm
sure, and if you beleive that you must beleive in the Easter bunny too…corporate handout not forthcoming…I hope…
Comment by Loop Lady Monday, Mar 28, 11 @ 4:12 pm
The question is not a matter of how much Cat makes. It’s about how much they can make in Illinois compared to how much they can make in another state. When the scale tips too far, they’ll be gone.
Comment by Old Milwaukee Monday, Mar 28, 11 @ 4:13 pm
Oh Oh another report that fails to list IL as a bad place to do biz….Quick get Gags Brady and Billboards to bet for another CAT letter…..from the BusinessWire….(Please overlook the fact that Chubbs Christie, CaribouBarbie, WhackyWalker and that Palenty guy all have their states listed as slop pits)
CHICAGO–(BUSINESS WIRE)–“Talk is cheap, and governors need to stop making excuses and stop focusing solely on raising taxes and service cutting solutions,” says Dr. Ronald R. Pollina, author of the recent book Selling Out a Superpower: Where the U.S. Economy Went Wrong and How We Can turn It Around and the Pollina Corporate Top 10 Pro-Business States study.
“Ask for the specifics, and you get more sound bites. If they had an effective plan, they would realize Jobs = Income = Tax Revenue = Strong State Economies. Increase revenue by creating jobs, not raising taxes, is complicated–and beyond their ability.”
.“These are short-term solutions to long-term problems that they refuse to address. They have no effective economic plans. Ask them and politicians say they will increase jobs,” Dr. Pollina explains.
“Ask for the specifics, and you get more sound bites. If they had an effective plan, they would realize Jobs = Income = Tax Revenue = Strong State Economies. Increase revenue by creating jobs, not raising taxes, is complicated–and beyond their ability.”
Ranking lowest in the annual Pollina study, which evaluates states based on 31 corporate site selection factors, are: Arkansas, Minnesota, Alaska, Kentucky, New Jersey, Wisconsin, Massachusetts, West Virginia, Rhode Island, and in 50th place for the seventh year, California. Pro-business efforts for these states can be best described as pathetic.
With the exceptions of Alaska and Arkansas, they face 2012 budget shortfalls of $44.6 billion or approximately 36 percent of the $125 billion shortfall for all states.
For these states, unemployment ranges from 7.1 to 12.4 percent. They suffer from the Deadly Duo of high corporate taxes (26th to 47th highest nationally) and not being Right-to-Work states (employee has option to not join union). Only Arkansas is a Right-to-Work state. “There are ways to allow limited Right-to-Work with only minor compromise by unions, but even this scares the pants off most politicians, better to raise taxes and cut services,” Pollina emphasizes.
Combine federal and state corporate taxes and wages and these states rank among the most expensive places in the world for business. This pushes companies offshore if they are to survive in the global marketplace.
As taxes rise and services diminish in these states, their four million unemployed will have more company. “Do governors in the Bottom 10 states have a plan for job creation or economic development,” asks Dr. Pollina, “or are they your typical sound bite politicians?”
Comment by CircularFiringSquad Monday, Mar 28, 11 @ 4:13 pm
Word: yes, I wonder how much in State taxes was paid by Cat in the last few years…wanna bet none?
Comment by Loop Lady Monday, Mar 28, 11 @ 4:13 pm
You can do a lot better than that article you link to on high speed rail. The author states, “Billions of taxpayer dollars are on the table and likely to be picked up by foreign companies like Canada’s Bombardier and Germany’s Siemens.” But she “forgot to mention that Talgo is pulling out of Wisconsin because of this situation. Nice job creation idea there in Wisconsin, Gov. Walker.
http://www.jsonline.com/news/statepolitics/111686184.html
And unsupported opinion like this is just baloney:
“The only area in the United States with enough population to make high-speed rail feasible is the Northeast Corridor”
Comment by Jeff L Monday, Mar 28, 11 @ 4:45 pm
The $48 million in State and Local taxes, I’m assuming comes from their annual report. The includes ALL state and local taxes paid to ALL the various entities. Income taxes in every state, plus property taxes for all of their plants. There is no way their Illinois Income Tax Liability is that high.
Comment by Anon Monday, Mar 28, 11 @ 5:30 pm
With a company like Caterpillar, who cares what State taxes they pay. Pol’s make their hay cutting tax breaks for big companies. Yes, both D and R pols.
What’s significant is that Cat has 23,000 employees paying 5% of their income to the State. That’s worth worrying about.
Comment by park Monday, Mar 28, 11 @ 7:28 pm
–The $48 million in State and Local taxes, I’m assuming comes from their annual report. The includes ALL state and local taxes paid to ALL the various entities. Income taxes in every state, plus property taxes for all of their plants. There is no way their Illinois Income Tax Liability is that high.–
Anon, that’s point that the Fox talking-points crowd with never acknowledge.
Park, no one denies the value of CAT to the Illinois economy. But the idea that they’d flee the state over an increase in a tax that they only pay, maybe, on sales within the state is just absurd. What’s so hard to understand about that?
Comment by wordslinger Monday, Mar 28, 11 @ 8:47 pm
What exactly is the minimal tax corporations are willing to pay and why are units of government (Nation/State/Municipalities) allowing corporations to continuously play one against the other rather than demanding businesses pay a rate that will support the public services they need — roads; police; EM; police; etc. — required for their operations as well as their employees, customers, and families?
Comment by Kasich Walker, Jr. Monday, Mar 28, 11 @ 10:46 pm
“Does anyone really believe blue chip engineers, IT personnel, MBAs and their families dream of being hired to one of those centers of high culture? This argument that Illinois is going “downhill” is ridiculous. Downhill compared to what?”
I wasn’t aware that Peoria was viewed as a center of high culture. Interesting.
This strikes me as nothing more than a CAT shakedown for corporate welfare handouts. Can’t say I blame them because it’s doing right by their shareholders and they have all the leverage in the world on Quinn, but if the company is able to throw down $7.5 million of CAT money to the CEO’s alma mater in Millikin, you’re telling me they really can’t afford to pay just a little bit more in taxes to upkeep our interstate highways and bridges in the Peoria area that provide big benefits to CAT and its employees?
Comment by hisgirlfriday Monday, Mar 28, 11 @ 11:24 pm