Thursday, March 31, 2011

Caterpillar, Illinois Corporate Taxes, and Threats



Here's a great example of the convergence of blogocombat, big business, and big government.

 Caterpillar CEO sends a letter to Governor Pat Quinn, telling him that they need to meet to discuss corporate tax hikes and Caterpillar's ability to profitably do business in the state. Caterpillar's Doug Oberhelman said "the direction that this state is headed in is not favorable to business and I'd like to work with you to change that."

Some have interpreted the Caterpillar letter as a "threat" to leave Illinois. Saying that other states are trying to woo Caterpillar into relocating is not a threat, it's a statement of reality, indicating that Illinois has competition for Caterpillar's presence. Illinois lawmakers must take these facts into consideration.

Some people claim they will be happy to see Caterpillar leave. For example, Peoria Pundit's "Caterpillar: Don't Let the Door Hit Your Ass on the Way Out".

BusinesssWeek has reported on this story in "Caterpillar CEO: No Plans to Leave Illinois".

WEEK Central Illinois News Center has the union reaction in "UAW Reacts to CAT Letter to Quinn".

The Peoria Journal Star also reported on Caterpillar CEO's response to those who think he was trying to bully the Illinois "tax and waste" legislature.

PJ Star "Leaders Say Caterpillar Letter Should Be a Wake Up Call for Illinois"

The original PJ Star article is "Cat Raises the Possibility of Leaving Illinois".

[QUOTE]

Caterpillar Inc. CEO Doug Oberhelman resumed his call for lower taxes on business in a speech Wednesday before the U.S. Chamber of Commerce in Washington, D.C.

"This past weekend, Caterpillar received quite a bit of attention regarding a letter I sent to Illinois Gov. Pat Quinn," he said.

"The headlines were sensational - they said things like, 'Cat leaving Illinois,' which isn't what the letter said. I actually said I'm looking forward to finding ways to invest more in Illinois.

"Illinois is our home, but the facts remain: Legislators in Illinois have created an environment that is unfriendly to business and investment, and at Caterpillar, we want to help change that."

[END QUOTE]

I'm no authority on Caterpillar, and whether this large corporation has a net good or bad impact on Peoria and Illinois. But I'm quite sure that the political machine of Illinois is rapidly destroying us.

Illinois has a very unfavorable tax climate for business, thanks to exorbitant tax rates. The theory seems to be to strangle the goose that lays the golden egg. When all the golden egg laying geese flee, all that will be left to strangle for more money will be individual taxpayers.

Governments tend to spend more money than is coming in, because the politicians owe favors to the organizations that support them, and don't care how much money that requires, or even if they indeed have the money available.

I think big business is generally uncaring toward the poor and the communities in which they set up shop. When I hear that GE is paying zero federal taxes, probably due to their support for Obama, it makes my blood boil. But government has all the bombs and all the laws, so I think we need to scrutinize both corporate and governmental entities.

As I have no love for either Big Business or Big Government, I am not taking sides in this debate, except to note the rampant misuse of language by detractors (excuse the pun) of Caterpillar.

As far as Caterpillar issuing a "threat", I'm tired of people confusing threat and warning. There are actually four types of statements that are often described as "threats".

There are differences between (1) threat (2) warning (3) cautionary announcement (4) plea to meet and discuss an issue.

If I say, “If you keep setting fire to my house, I’ll have to stop you”, that’s a warning.

If I say, “Set fire to my house one more time and I’ll kick your ass” that’s a threat.

If I say, “Setting fire to my house is making me consider moving to another neighborhood”, that’s a cautionary announcement.

If I say, “Since you keep setting fire to my house, I’d like to sit down and discuss how we can live near each other without all these fires being set”, that’s a plea to meet and discuss an issue.


3 comments:

samantha said...

Indiana, Wisconsin, and New Jersey have recently in the public eye trying to woo businesses from Illinois because of its "unfavorable tax climate for business." All three of those states have HIGHER corporate tax rates than Illinois.

Matthew said...

Hmm, apparently my daughter was logged in to her gmail account. That last comment was from me.

BrianG said...

Maybe they could move to Oregon which as Pulitzer Prize winning David Cay Johnson shows in this article http://www.tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8FGJDA?OpenDocument

Leona Helmsley said it best "We don't pay taxes, only little people pay taxes."