Taxed By The Boss

[Woodruff]

Companies allowed to keep worker taxes?
http://blogs.reuters.com/david-cay-johnston/2012/04/12/taxed-by-the-boss/

[Night Strike]

I remember hearing about this. All it is is the company collecting the state taxes from the employees while at the same time they're getting some sort of tax credit from the state government. Instead of the company sending the state a check with the tax money and then the government sending them a check back for their tax credit, they just get to keep the money directly. It's a much more efficient system and allows the company to have that money directly on hand to use as needed/allowed based on the specific tax credit (if there are spending restrictions on the money).

[Woodruff]

I remember hearing about this. All it is is the company collecting the state taxes from the employees while at the same time they're getting some sort of tax credit from the state government. Instead of the company sending the state a check with the tax money and then the government sending them a check back for their tax credit, they just get to keep the money directly. It's a much more efficient system and allows the company to have that money directly on hand to use as needed/allowed based on the specific tax credit (if there are spending restrictions on the money).

Ok, IF that's the case and these two things are the same, then I agree with you that is more efficient and I have no problem with it other than it seems to me to be ripe for abuse. But I'm not seeing that it looks the same. Do you have a link or something I could look at?

[Night Strike]

The links appear to be long gone from my local radio station's site from when they talked about this topic. Doing a quick Google search, I found a Christian Science Monitor opinion piece that includes the paragraph:

Sixteen states now allow corporations to withhold state income taxes from employees and keep the money as an incentive to locate to or remain in a state. That means that, in effect, employees pay personal income tax to their company rather than their state government. (The 16 states are: Colorado, Connecticut, Georgia, Illinois, Indiana, Kansas, Kentucky, Maine, Mississippi, Missouri, New Jersey, New Mexico, North Carolina, Ohio, South Carolina, and Utah.)

http://www.csmonitor.com/Commentary/Opinion/2012/0517/Your-employer-may-be-pocketing-your-state-income-tax

As far as the dollars and cents go, I doubt there would be any more possible abuse than what would normally be seen in paying state tax withholdings. All these articles keep talking about the state tax money that's being withheld from a person's paycheck and not taxes on profits, so all that information would be reported and calculated anyway.

Now, if you want to talk about the possibility of there being fraud by using qualifying terms of "keeping jobs in the state" or "not relocating to a different state", that's probably a completely different scenario.

[fadedpsychosis]

the only good thing about having Texas as my home of record is there's no state income tax...

[PLAYER57832]

While it may not be stealing, the whole idea of giving such heavy tax incentives to companies that are supposed to be generating enough profits to be successful... and then claiming there are not enough funds to support things that benefit the entire public --- items like education, roads, water systems and even environmental protections, seems a bit too much like the "taking" we are hearing so much about. Only its not taking to benefit society, its taking to benefit someone's private pocketbook.. with the faint promise of a few jobs as justification.

[thegreekdog]

While it may not be stealing, the whole idea of giving such heavy tax incentives to companies that are supposed to be generating enough profits to be successful... and then claiming there are not enough funds to support things that benefit the entire public --- items like education, roads, water systems and even environmental protections, seems a bit too much like the "taking" we are hearing so much about. Only its not taking to benefit society, its taking to benefit someone's private pocketbook.. with the faint promise of a few jobs as justification.

The reasons that states give tax incentives and credits to companies is so that companies will build or move a location to that particular state instead of another, thus providing that state with potentially highly compensated employees and/or jobs which equates to tax revenue from those employees.

In other words...

State tax incentives = company moves to state
Company moves to state = more employees in the state
More employees in the state = more tax revenue

States don't give out incentives unless they are going to make money in the end.

I can't wait to read your counter argument to this.

[PLAYER57832]

While it may not be stealing, the whole idea of giving such heavy tax incentives to companies that are supposed to be generating enough profits to be successful... and then claiming there are not enough funds to support things that benefit the entire public --- items like education, roads, water systems and even environmental protections, seems a bit too much like the "taking" we are hearing so much about. Only its not taking to benefit society, its taking to benefit someone's private pocketbook.. with the faint promise of a few jobs as justification.

The reasons that states give tax incentives and credits to companies is so that companies will build or move a location to that particular state instead of another, thus providing that state with potentially highly compensated employees and/or jobs which equates to tax revenue from those employees.

I understand the theory. Its the reality with which I disagree. Mostly, these programs don't actually benefit society anywhere near as much as supporting the public works would. They don't even really do much to cause businesses to relocate more than short distances.

In other words...

State tax incentives = company moves to state
Company moves to state = more employees in the state
More employees in the state = more tax revenue

States don't give out incentives unless they are going to make money in the end.

I can't wait to read your counter argument to this.

To begin with, companies that are so encouraged are often those close to margins.. things like Walmart, plus big companies that can choose where they go and that send a lot of their profits off elsewhere, rather than small mom and pops. The result is a combination of many jobs being deficits.(. jobs that don't pay the cost of living, that mean the workers will be getting subsidies) AND these companies being able to push out small businesses. Becuase larger companies are more often positioned to get those breaks, are deemed more "cost effective" to get them, it winds up penalizing the very small businesses that offer more of a full return.

There is also just the principle of the thing. Companies are supposed to be able to support themselves. If they cannot, they need to change their business model.. not rely upon tax payers to make their profits real. These breaks just hide inefficiences way too often.

To contrast, if you look at what attracts people with MONEY to areas, you find that a good infrastructure.. roads and phone lines traditionally, but more and more high speed internet. Also things like schools, programs for kids, parks and even good weather all make more difference in the types of businesses that stay and make real investments in an area (and note. this is of direct and pertinent concern to my community, though I am sorry I cannot get into precise details becuase part of it is confidential and part of it is just too specific).

Put it another way.. if you want people who will "take their money and run at the first opportunity".. offer tax breaks. If you want people to actually stay and invest.. provide good schools, roads and a generally nice place to live.

Looking for the data, but as usual, I am utterly disgusted by the way search engines give so much higher priority to popular ideas, with no regard to whether the information is factual or not.

OR, since you sem to dismiss anything I say of late:
from this link: http://www.npr.org/templates/story/stor ... Id=4807184

August 20, 2005 Efforts by states and cities to "create" jobs cost taxpayers $50 billion a year, author Greg LeRoy says. And given the nature of corporate America, there's no guarantee those jobs will stick around... or even materialize in the first place.

Lurking within the records of most cities and states in America there lies a scandal. A tax scandal. A jobs scandal. A corporate and political scandal.

Look up the names of corporations that have received taxpayer subsidies in the name of jobs. Almost every big company has gotten them. In fact, the average state now has more than thirty economic development subsidies, many of which are locally granted by cities and counties. These subsidies include property tax abatements, corporate income tax credits, sales and excise tax exemptions, tax increment financing, low-interest loans and loan guarantees, free land and land write-downs, training grants, infrastructure aid — and just plain cash grants.

Chances are you will find companies -— many companies -— that have failed to create or retain as many jobs as they said they would. Companies that are paying poverty wages or failing to provide healthcare to their employees. Companies that are abandoning our cities and sprawling onto farmland and natural spaces. Even companies that are outsourcing jobs offshore.

Dig a little deeper and you'll undoubtedly find companies that have not created any new jobs -— even some that have actually laid people off since they got the subsidies. Other companies that have gotten paid just to move existing jobs from one place to another, where they are proclaimed to be "new jobs."

How can companies get away with this? Because the system is rigged. Corporations have it down to a science. They have learned how to chant "jobs, jobs, jobs" to win huge corporate tax breaks -— and still do whatever they wanted to all along.

[thegreekdog]

While it may not be stealing, the whole idea of giving such heavy tax incentives to companies that are supposed to be generating enough profits to be successful... and then claiming there are not enough funds to support things that benefit the entire public --- items like education, roads, water systems and even environmental protections, seems a bit too much like the "taking" we are hearing so much about. Only its not taking to benefit society, its taking to benefit someone's private pocketbook.. with the faint promise of a few jobs as justification.

The reasons that states give tax incentives and credits to companies is so that companies will build or move a location to that particular state instead of another, thus providing that state with potentially highly compensated employees and/or jobs which equates to tax revenue from those employees.

I understand the theory. Its the reality with which I disagree. Mostly, these programs don't actually benefit society anywhere near as much as supporting the public works would. They don't even really do much to cause businesses to relocate more than short distances.

In other words...

State tax incentives = company moves to state
Company moves to state = more employees in the state
More employees in the state = more tax revenue

States don't give out incentives unless they are going to make money in the end.

I can't wait to read your counter argument to this.

To begin with, companies that are so encouraged are often those close to margins.. things like Walmart, plus big companies that can choose where they go and that send a lot of their profits off elsewhere, rather than small mom and pops. The result is a combination of many jobs being deficits.. jobs that don't pay the cost of living, that mean the workers will be getting subsidies. Becuase larger companies are more often positioned to get those breaks, are deemed more "cost effective" to get them, it winds up penalizing the very small businesses that offer more of a full return.

Do you know how tax incentives work? I'm not talking about the theory behind them, because you clearly do not understand that. But do you know how they work procedurally? How do companies get these tax incentives? Do they file forms? Do those forms require certain items to be disclosed, like, for example, how many jobs will be created, the average salary of such jobs, perhaps the racial composition of the employees? If you don't know the answers to those questions, I'm not sure how you can even remotely have the authority to say the bolded stuff above.

[There is also just the principle of the thing. Companies are supposed to be able to support themselves. If they cannot, they need to change their business model.. not rely upon tax payers to make their profits real. These breaks just hide inefficiences way too often.

Did you even read my post? The state doesn't give a flying monkey if the company can support itself. Ohio offers incentives to a company so that the company builds its new plant in Ohio instead of Pennsylvania so that Ohio can have all the attendant benefits. It has nothing to do with helping the company generally. It has everything to do with helping the state.

[quote="PLAYER57832]To contrast, if you look at what attracts people with MONEY to areas, you find that a good infrastructure.. roads and phone lines traditionally, but more and more high speed internet. Also things like schools, programs for kids, parks and even good weather all make more difference in the types of businesses that stay and make real investments in an area (and note. this is of direct and pertinent concern to my community, though I am sorry I cannot get into precise details becuase part of it is confidential and part of it is just too specific).

Put it another way.. if you want people who will "take their money and run at the first opportunity".. offer tax breaks. If you want people to actually stay and invest.. provide good schools, roads and a generally nice place to live.

Looking for the data, but as usual, I am utterly disgusted by the way search engines give so much higher priority to popular ideas, with no regard to whether the information is factual or not.[/quote]

How do you think local communities get nice schools and good infrastructure? Through taxes. How do local communities get their taxes? Usually property taxes or earned income taxes. Do you know where states get their taxes from? Number one is sales tax. Number two is personal income tax. If you bring in more people with high incomes, you get more personal income tax dollars. How do you get more people with high incomes? You incentivize a company to locate in your jurisdiction.

[PLAYER57832]

States don't give out incentives unless they are going to make money in the end.

Seriously? You are seriously arguing this?

[There is also just the principle of the thing. Companies are supposed to be able to support themselves. If they cannot, they need to change their business model.. not rely upon tax payers to make their profits real. These breaks just hide inefficiences way too often.

Did you even read my post? The state doesn't give a flying monkey if the company can support itself. Ohio offers incentives to a company so that the company builds its new plant in Ohio instead of Pennsylvania so that Ohio can have all the attendant benefits. It has nothing to do with helping the company generally. It has everything to do with helping the state.

Read what you just said. See, BECAUSE there is nothing in the incentive to ensure that the company is actually creating jobs that pay real wages, as opposed to just boosting stocks and salaries of a few execs who live somewhere else, that is why the taxes don't work.

BUT... I modified the above while you were writing that, added a reference. Maybe reading that will help clarify.. or at least get across that this is not just some imaginary idea of mine.

How do you think local communities get nice schools and good infrastructure? Through taxes. How do local communities get their taxes? Usually property taxes or earned income taxes. Do you know where states get their taxes from? Number one is sales tax. Number two is personal income tax. If you bring in more people with high incomes, you get more personal income tax dollars. How do you get more people with high incomes? You incentivize a company to locate in your jurisdiction.

Your assumptions, the same ones made by many legislators and localities.. are just false. The problem is that these programs DON'T, overall, bring in high wages, DON'T general more taxes.

BUT.. these companies have very slick campaigns to convince a lot of people otherwise.

[thegreekdog]

States don't give out incentives unless they are going to make money in the end.

Seriously? You are seriously arguing this?

[There is also just the principle of the thing. Companies are supposed to be able to support themselves. If they cannot, they need to change their business model.. not rely upon tax payers to make their profits real. These breaks just hide inefficiences way too often.

Did you even read my post? The state doesn't give a flying monkey if the company can support itself. Ohio offers incentives to a company so that the company builds its new plant in Ohio instead of Pennsylvania so that Ohio can have all the attendant benefits. It has nothing to do with helping the company generally. It has everything to do with helping the state.

Read what you just said. See, BECAUSE there is nothing in the incentive to ensure that the company is actually creating jobs that pay real wages, as opposed to just boosting stocks and salaries of a few execs who live somewhere else, that is why the taxes don't work.

BUT... I modified the above while you were writing that, added a reference. Maybe reading that will help clarify.. or at least get across that this is not just some imaginary idea of mine.

It is an imaginary idea. Do you know why your idea is imaginary? Because I know about incentives and tax credits. It's what I do for a living. I literally do it every single day. And I know that if a company gets incentives from a state they are required, by law, before they get such incentives, to provide the number of jobs they are creating, as well as the average salaries of the jobs created. In many cases, the Company is required to invest a certain amount of money into the construction of infrastructure or the building itself before the company even qualifies for any tax incentives or credits. Furthermore, if the Company moves or closes its location in the state, the incentives are clawed back, meaning the company has to pay them back.

EDIT - And by the way, you know what that NPR "story" doesn't have? Evidence.

[PLAYER57832]

EDIT - And by the way, you know what that NPR "story" doesn't have? Evidence.

That's because it was a review of a book. The book has the evidence. But hey, I guess you would have had to actually read it to understand that.

[MegaProphet]

States don't give out incentives unless they are going to make money in the end.

Seriously? You are seriously arguing this?

[There is also just the principle of the thing. Companies are supposed to be able to support themselves. If they cannot, they need to change their business model.. not rely upon tax payers to make their profits real. These breaks just hide inefficiences way too often.

Did you even read my post? The state doesn't give a flying monkey if the company can support itself. Ohio offers incentives to a company so that the company builds its new plant in Ohio instead of Pennsylvania so that Ohio can have all the attendant benefits. It has nothing to do with helping the company generally. It has everything to do with helping the state.

Read what you just said. See, BECAUSE there is nothing in the incentive to ensure that the company is actually creating jobs that pay real wages, as opposed to just boosting stocks and salaries of a few execs who live somewhere else, that is why the taxes don't work.

BUT... I modified the above while you were writing that, added a reference. Maybe reading that will help clarify.. or at least get across that this is not just some imaginary idea of mine.

It is an imaginary idea. Do you know why your idea is imaginary? Because I know about incentives and tax credits. It's what I do for a living. I literally do it every single day. And I know that if a company gets incentives from a state they are required, by law, before they get such incentives, to provide the number of jobs they are creating, as well as the average salaries of the jobs created. In many cases, the Company is required to invest a certain amount of money into the construction of infrastructure or the building itself before the company even qualifies for any tax incentives or credits. Furthermore, if the Company moves or closes its location in the state, the incentives are clawed back, meaning the company has to pay them back.

EDIT - And by the way, you know what that NPR "story" doesn't have? Evidence.

I appreciate hearing your personal experience. If you don't mind me asking what is it you do for a living?

[BigBallinStalin]

States don't give out incentives unless they are going to make money in the end.

Seriously? You are seriously arguing this?

[There is also just the principle of the thing. Companies are supposed to be able to support themselves. If they cannot, they need to change their business model.. not rely upon tax payers to make their profits real. These breaks just hide inefficiences way too often.

Did you even read my post? The state doesn't give a flying monkey if the company can support itself. Ohio offers incentives to a company so that the company builds its new plant in Ohio instead of Pennsylvania so that Ohio can have all the attendant benefits. It has nothing to do with helping the company generally. It has everything to do with helping the state.

Read what you just said. See, BECAUSE there is nothing in the incentive to ensure that the company is actually creating jobs that pay real wages, as opposed to just boosting stocks and salaries of a few execs who live somewhere else, that is why the taxes don't work.

BUT... I modified the above while you were writing that, added a reference. Maybe reading that will help clarify.. or at least get across that this is not just some imaginary idea of mine.

It is an imaginary idea. Do you know why your idea is imaginary? Because I know about incentives and tax credits. It's what I do for a living. I literally do it every single day. And I know that if a company gets incentives from a state they are required, by law, before they get such incentives, to provide the number of jobs they are creating, as well as the average salaries of the jobs created. In many cases, the Company is required to invest a certain amount of money into the construction of infrastructure or the building itself before the company even qualifies for any tax incentives or credits. Furthermore, if the Company moves or closes its location in the state, the incentives are clawed back, meaning the company has to pay them back.

EDIT - And by the way, you know what that NPR "story" doesn't have? Evidence.

I appreciate hearing your personal experience. If you don't mind me asking what is it you do for a living?

He's the main behind the curtain with two levers: Tax Credits and Political Payouts.

[BigBallinStalin]

TGD, I admire your capacity of patience with player.

Player, think about the opposite of what TGD is saying.

"States offers tax incentives to companies in order to receive less tax revenues, create less jobs, and induce less businesses."

[Woodruff]

While it may not be stealing, the whole idea of giving such heavy tax incentives to companies that are supposed to be generating enough profits to be successful... and then claiming there are not enough funds to support things that benefit the entire public --- items like education, roads, water systems and even environmental protections, seems a bit too much like the "taking" we are hearing so much about. Only its not taking to benefit society, its taking to benefit someone's private pocketbook.. with the faint promise of a few jobs as justification.

The reasons that states give tax incentives and credits to companies is so that companies will build or move a location to that particular state instead of another, thus providing that state with potentially highly compensated employees and/or jobs which equates to tax revenue from those employees.

Correct. It's an employment thing.

[Woodruff]

While it may not be stealing, the whole idea of giving such heavy tax incentives to companies that are supposed to be generating enough profits to be successful... and then claiming there are not enough funds to support things that benefit the entire public --- items like education, roads, water systems and even environmental protections, seems a bit too much like the "taking" we are hearing so much about. Only its not taking to benefit society, its taking to benefit someone's private pocketbook.. with the faint promise of a few jobs as justification.

The reasons that states give tax incentives and credits to companies is so that companies will build or move a location to that particular state instead of another, thus providing that state with potentially highly compensated employees and/or jobs which equates to tax revenue from those employees.

I understand the theory. Its the reality with which I disagree. Mostly, these programs don't actually benefit society anywhere near as much as supporting the public works would.

It's not about benefitting society. It's about benefitting the state. Take Wal-Mart, for instance. Most of you know my feelings about Wal-Mart, so I won't go into that, and I would prefer this didn't turn into a hate-Wal-Mart thread (ok, not that much, but please don't). Wal-Mart gets some tax-break largesse in order to build, and they get it because they're going to be able to hire people to work there, not because Wal-Mart is going to do something that will help out society (ha!).

They don't even really do much to cause businesses to relocate more than short distances.

This really isn't accurate, PLAYER. In fact, I would say that "more than short distances" is thoroughly irrelevant...as far as moving a business (or building a new branch or whatever), there is little difference between moving to Iowa from Nebraska or moving to Florida from Nebraska.

[Woodruff]

Read what you just said. See, BECAUSE there is nothing in the incentive to ensure that the company is actually creating jobs that pay real wages, as opposed to just boosting stocks and salaries of a few execs who live somewhere else, that is why the taxes don't work.

Actually, just by building those buildings, they are creating work for other companies that pay real wages. So I'd have to disagree with you.

[Woodruff]

EDIT - And by the way, you know what that NPR "story" doesn't have? Evidence.

I appreciate hearing your personal experience. If you don't mind me asking what is it you do for a living?

thegreekdog is a professional Philadelphia Phillies fan. I hear tell he is the infamous individual who hit Santa in the head with a snowball.