Boeing to move jet production jobs from Kansas to Washington

December 19, 2011

TOPEKA — No one is talking about the thousands of high-paying jobs quietly leaving Kansas. Aerospace giant Boeing Co. declined to disclose any hint of the company’s plans Monday.

Even Kansas Gov. Sam Brownback, who has publicly urged Boeing to keep what he said are promises to build major parts of the U.S. Air Force tanker jets in Wichita, refused to comment on the situation. “The administration won’t … until Boeing announces its decision,” said Sherriene Jones-Sontag, the governor’s press secretary. Instead Washington state’s employment boost and Kansas’ bust were announced Monday by U.S. Rep Mike Pompeo, R-Kan., in Wichita.
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There’re good stories and there are facts…you decide

The left-leaning Citizens for Tax Justice/Institute for Taxation and Economic Policy introduced its (their?) recently released study on “corporate tax dodging in the fifty states”  by saying,

In October, South Carolina Governor Nikki Haley suggested that gradually repealing the state’s corporate income tax should be a priority for lawmakers in 2012. Haley’s idea was alarming, but hardly surprising: in the past year, governors in Arizona and Florida have proposed similar plans, and lawmakers in a number of other states have moved to enact expensive new corporate tax breaks or reduce the corporate tax rate. Noticeably absent from the policy debates in these states, however, has been any discussion of whether businesses in each of these states are currently paying the corporate income tax to begin with.

And reporter John Gramlich from Stateline (a service of the Pew Charitable Trust) reviews the study and its findings, almost without question. I say “almost” because, although Stateline gave its readers no hint of the generally acknowledged political leanings of the CTJ/ITEP, nor did reporter Gramlich own any question of the organization’s findings, he did give a slight nod to the existence of dissenting opinion in his last paragraph by saying,

While the ITEP/CTJ study examines state corporate income taxes, it leaves out several other important state-based taxes that businesses pay, as another research and advocacy group, the Council On State Taxation, points out. The group, which represents more than 600 multi-state corporations, notes that these levies include franchise, net worth, capital stock, gross receipts and excise taxes — which collectively bring in a far bigger tax haul for states than corporate income taxes do.

The Council on State Taxation (COST) was not nearly so circumspect in its own comments about the CTJ work. Here’s what they had to say:

The study, which focuses exclusively on state and local corporate income taxes, is deeply flawed and distorts the state corporate income tax system.  Moreover, it misleads policymakers and the public regarding the true composition of business tax payments to state and local governments.  It is unfortunate that the report, purportedly a comprehensive research paper, is so overtly political in its scope and message.

“Noticeably absent” from the CTJ study, according to COST, are:

… franchise, net worth, capital stock, gross receipts, excise or other similar business taxes. Perhaps more importantly, the study also excludes all property taxes, sales taxes, and payroll taxes paid by companies during those three years.

In FY 2010, businesses paid $619 billing in total state and local taxes. Of that amount, total state and local corporate income taxes were $44.1 billion. Thus, the taxes CTJ chose not to mention are 14 times larger than the taxes CTJ chose to include in the study. In other words, the CTJ study covers only about 7% of total state and local business taxes. (emphasis in the original)

But, as my daddy used to say, who wants to wreck a good story with facts?

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News business taxes for cash-strapped Illinois?

Statehouse News reports today that in Illinois the state’s promise to pay is not a guarantee.

The state’s 44 regional superintendents learned the hard way that the state constitution does not automatically force Illinois to pay workers, vendors, Medicaid providers and even elected officials — particularly once “subject to appropriation” language is applied.

Gov. Pat Quinn used the “subject to appropriation” line when he vetoed money for the regional superintendents from the fiscal 2012 state budget and announced plans to close seven state facilities.

The Civic Federation’s Institute for Illinois Fiscal Sustainability reported in September that

… the [state’s] spending plan will increase Illinois’ total general operating deficit to $5.0 billion by June 2012. The shortfall would be even larger if the State had not significantly underfunded Medicaid costs and business tax refunds. The full 56-page report is available at

More recently, the Taxpayers’ Federation of Illinois  reports that the state legislature is considering an extensive tax package:

Our initial impression is that the package could potentially result in a large retroactive tax increase on business soon after the large tax rate increase enacted earlier this year.  It also appears to have significant out-year reductions in state revenues from current expected levels.   While the exact details and makeup of this package seems to be changing by the moment, we have listed below some of the known components currently being discussed as part of this package:

As Richard Davis says in his column today in both the Everett Herald and The News Tribune in which he writes of Washington State’s deficit challenge,

Hiking taxes while cutting spending poses a special challenge. There’s no appetite for paying more for less.

How is Illinois going to solve this situation?

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Amazon, e-Bay part company on online sales tax legislation

Looking for a way to level the playing field between online and brick-and-mortar retailers, and in an increasingly desperate search for revenue, including any revenue that might be slipping by state tax collectors, the U.S. Senate is working on compromise legislation — this time with support from five Republicans — to force online retailers to collect sales taxes on all their sales.

Forbes contributor, Robert Wood, provides an excellent review of the current debate with links to the plethora of articles being written.

Amazon has signed on with “strong support”, but E-Bay remains unsatisfied with the changes. Kyung M. Song of the Seattle Times and several other writers have reported a statement from eBay:

“This is another Internet sales tax bill that fails to protect small business retailers using the Internet and will unbalance the playing field between giant retailers and small business competitors,” Tod Cohen, eBay’s vice president for government relations, said in a statement. “It does not make sense to expand Internet sales tax burdens on small businesses at a time when we want entrepreneurs to create jobs and economic activity.”

Mark Hachman at PC Mag says eBay

still opposes the bill, because the [small business] exemption level is “far below objective and established definitions of small business retailers,” a company representative said in a statement.

The level in the bill is 60 times smaller than the U.S. Small Business Administration’s existing size standard for small online retailers, 20 times smaller than the Treasury Department’s recent proposal for a single small business standard for all small businesses, and 10 times small than the Small Business Exemption in Internet sales Tax bills from 2001-2008, the eBay representative said.

Meanwhile, Iain Thompson reporting for The Register from San Francisco’s Open Mobile Summit, says eBay CEO John Donahue believes

the concept of e-commerce is dead and buried, since consumers really don’t care about where they buy, so long as they get the cheapest price.

Quoting Donahue, he reports

“Over the last 12-18 months we at eBay have changed our view on e-commerce,” he explained. “We’re now seeing a profound change in how consumers are behaving, and we’re going to see more changes in the next three years than we’re seen in the previous 20 in terms of shopping and payments. Mobile devices are blurring the lines between online and offline at a rate no one would have predicted.”

Retailers now face a choice, he said – they can either get on board, or face losing out on sales. High street retailers know very little about their customers unless they buy something, in comparison to companies such as Amazon which know pretty much everything, he explained. If companies fail to pick up on the information on consumer behavior that’s out there, then sales will be negatively impacted.

Where does all this leave the Marketplace Fairness Act?

On the side of something passing: The National Retail Federation likes it; Amazon likes it; the National Council of State Legislators likes it; states like Tennessee and California have agreed to suspend their individual sales tax collection efforts temporarily in hopes of a national solution.

On the other side, smaller online retailers may gain traction with their arguments for better exemptions. More key, however, will be how Republicans manage to counter the National Taxpayer Union and the Direct Marketers Association with their base, who are likely to be more sympathetic to concerns of consumers and taxpayers, than to those of large retailers and state tax collectors.

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All eyes on the Buckeye State tomorrow

Labor anticipates winning handily in Ohio where Issue 2, a referendum on public employee collective bargaining privileges, is poised to roll back legislative action championed by Republican Governor John Kasich.

Reporting from Hanoverton, OH Paul West of the LA Times says,

An aggressive Republican drive to weaken the labor rights of government workers appears to have crested, at least in Ohio, where voters are expected to throw out a far-reaching anti-union law this week.

Newly-elected Governor Kasich’s popularity has suffered over the issue, for which he has been the leading voice calling for passage of Issue 2. West says that

Kasich, the focus of both sides in the referendum fight, touts his blue-collar roots as the son of a postman. But he warns that a victory by organized labor would undercut his efforts to hold the line on government spending and rebuild the state’s economy.

“Look, I understand that people are nervous about this in the public sector,” he told a northeastern Ohio rally in support of the anti-union law he signed in March. But, he added, “if we want to continue on this path of pulling Ohio out of this ditch, the state of Ohio has to be responsible.”

Joe Vardon of the Columbus Dispatch reports that

Public polling suggests that the labor coalition We Are Ohio should be successful in its attempt to overturn Senate Bill 5 by defeating Issue 2. But neither passage nor defeat of the issue is likely to end the debate.

For instance, there is wide speculation that, should Issue 2 be defeated, Republican lawmakers could come back with smaller pieces of legislation containing some components of Senate Bill 5 — such as limits on how much local governments would be required to pay toward employees’ health-insurance costs or on picking up portions of employees’ pension contributions.

House Speaker William G. Batchelder, R-Medina, said last week that lawmakers likely would wait until next year, after emotions cool from an often-contentious campaign, to consider the bite-sized changes.

Gov. John Kasich, the public face for the pro-Issue 2 campaign, said he would listen to what the voters have to say on Tuesday. But whatever that message is, he won’t change his approach or his agenda.

“What, you think I’m going to quit?” Kasich said last week. “You think I’m going to get weak? There’s no way. We’re going to listen to what the people have to say. Hopefully, we win. If we don’t, we’ll move on.

With time running out for campaigning, New York Post’s Michael A. Walsh opines on what’s at stake in tomorrow’s general election,

It’s another battle in a war under way all across the nation.

Just as in Wisconsin, where a similar law was the subject of a prolonged, anti-democratic wrangle that ultimately went the Republicans’ way, Big Labor has gone all out against reform. Well-funded organizers fanned out, gathering 1.3 million signatures to put a repeal measure, Issue 2, on the ballot.

Sadly, the odds favor repeal. The pro-union group We Are Ohio has amassed a $24 million war chest to roll back Kasich’s sensible reforms — far larger than the rival Building a Better Ohio’s $8 million campaign in favor of them. A late-October poll showed repeal leading by 57 percent to 32 percent, and Kasich now ranks as the most unpopular US governor, with a 54 percent disapproval rating….

…The counterattack against “public-service” reform has been ferocious, as unions claw to protect superfluous jobs and/or obscenely overgenerous benefits. It’s also been extraordinarily well-financed — as bloated wages make for bloated union dues.

It’s this simple: If Kasich loses tomorrow, we all lose — including the public-employee unions. After all, we all know the fable of the Golden Goose.

Don’t we?

Stay tuned…in the meantime read more on both sides from other writers/bloggers here, here, herehere, here, and here.

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Ohio voters labor over collective bargaining law

Stateline reports today that labor’s drive to overturn Ohio’s SB 5 is its last best hope for a win in 2011. Similar to more familiar and highly reported collective bargaining battles in Wisconsin earlier in the year, Stateline report that

The law that is before Ohio voters chiefly affects how local governments and school districts negotiate with their employees. The law eliminates binding arbitration and gives the final say in contract negotiations to elected officials and, in some cases, the voters. Labor critics argue that the law effectively changes the process from collective bargaining to “collective begging.” But supporters say the new process would be more transparent and would make local officials more accountable to taxpayers instead of just to the workers.

A service of the Pew Charitable Trust, Stateline reports that

Polls suggest [Ohio voters] are likely to reject SB 5 — which they would do by voting no on a referendum known as Issue 2. Quinnipiac University reported last week that 57 percent of those surveyed wanted to get rid of the law, compared to 32 percent who wanted to keep it. “Anything is possible in politics,” said Peter Brown, assistant director of the Quinnipiac University Polling Institute, in a statement, “but with such across-the-board support for repealing SB 5, the governor and his team can’t be optimistic about the fate of their law.”

Whatever happens in Ohio will likely affect labor relations elsewhere. The straight up-or-down vote on the labor law in a politically competitive state will show elected officials how the electorate feels about the increasingly frequent attempts to rein in pay and benefits for government workers.

Joe Hallett at the Columbus Dispatch agrees reporting that while Ohioans might believe that labor has too much power, they weren’t ready for their Republican legislative majority to double-down on laws curbing negotiating power of teachers, police and firefighters.

And while many Ohioans might agree that public-employee unions had grown too strong and fat, Senate Bill 5 took away any semblance of bargaining power for unions in their dealings with government employers. Strikes were banned, as was binding arbitration for police and firefighters. In the event of an impasse in negotiations, new “management rights” gave the government body authority to implement its own last offer, with no recourse for the unions.

Even though the GOP controlled 23 of the 33 seats in the Senate, the bill barely passed, 17-16. That outcome should have signaled that it needed to be moderated.

But House Republicans did exactly the opposite by largely diminishing the employee unions’ funding mechanism. At that point, Senate Bill 5 became a threat to the survival of the unions and portended to financially punish their political beneficiary, the Ohio Democratic Party.

Darrel Rowl in his analysis Sunday said the referendum, if passed, will raise more questions than it answers.

Rob Nichols, spokesman for Gov. John Kasich, added: “Regardless of what happens in November, the fact that local governments will need to be able to control their costs isn’t going away. … The biggest tragedy would be if local governments were left utterly defenseless to their own personnel costs.”

Senate Bill 5 brought angry crowds of thousands to the Statehouse; the collection of a record 915,000 signatures of registered voters to put it on the ballot; an energized Democratic Party that had been beaten down in 2010; and an opposition campaign that raised more than $30 million, four times what Republicans mustered to defend the law.

Theories abound regarding what majority Republicans might do next if Issue 2 goes down, and how they could do it without a repeat of 2011. Perhaps the most-unlikely scenario is a reintroduction of Senate Bill 5 in a similar form.

“What’s the definition of insanity — doing the same thing over and expecting a different result?” said Sen. Kevin Bacon, R-Minerva Park, who led the committee that heard Senate Bill 5.

But if Issue 2 fails, Bacon said, “without a doubt the issue needs to be addressed, and the sooner you work on it and get it done, you lighten the blow to our local entities.”

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Tennessee’s Alexander prepares national solution for online sales tax

Brian Reisinger of the Nashville Business Journal reports today that US Senator Lamar Alexander (R-TN) is preparing legislation to enable states to collect sales taxes purchases from online retailers like Amazon.

In Tennessee, controversy flared when    (Nasdaq: AMZN) undertook plans to build distribution centers in the state, with assurances from Democratic Gov. Phil Bredesen it would not have to collect sales taxes. The company argued the facilities were not sales operations, but brick-and-mortar retailers were outraged that Amazon would have physical operations in the state without collecting sales taxes.

[Tennessee’s current governor Bill] Haslam, a Republican, has reached a deal with that would have the online retail giant collecting sales taxes in 2014 if the federal government hasn’t passed legislation. Previously, Tennessee had feared that Amazon would simply take thousands of jobs to another state if it had to collect sales taxes.

California, according to Michael Hiltzik of the Los Angeles Times, has led with a more confrontational approach.

In that context, it’s not too early to ponder the state’s role in putting in its place, even though the ink is not quite dry on the deal signed by Gov. Jerry Brown last month requiring the giant online retailer to collect sales tax on purchases by its California customers.

The settlement shut down a potentially ugly fight that started when Brown signed a bill finding that the company’s physical presence within the state was sufficient to require it to collect sales tax, then was escalated by Amazon’s launching of a campaign to place a repeal referendum on the June 2012 state ballot.

Governing Magazine’s Ryan Holywell reported in August on an earlier attempt at national legislation by Senators Durbin (D-IL) and Conyers (D-MI) that had Amazon’s support.

The Durbin and Conyers bills would require that online and catalogue retailers collect sales tax for states that are members of the Streamline Sales Tax Governing Board, a coalition of states that have worked to simplify and unify their sales tax codes in an effort to make them easier for online retailers to pay.

But, Alexander, a former governor, sees the issue as one of states rights. The Business Journal says his plan

… could, in theory, allow a state to still offer no sales tax collection as an incentive to online retailers – which was at the heart of Tennessee’s dilemma – but Alexander said that option is a state’s right. He thinks the ongoing state-level battles with online retailers and the passage of a bipartisan national option will for the most part solve the issue.

The legislation risks becoming unpopular if consumers perceive it as a tax increase, and Alexander said he’s prepared to rebut Republicans who see it that way. The tax is supposed to be collected, he said, and Republicans should see the value in protecting states.

The entry of Alexander, who recently stepped down from Republican leadership, could help with another issue: getting priority in a tension-filled Congress. If it does, the legislation will face the court of public opinion and could be subject to debate over details among stakeholders currently united behind the push for national action.

If Alexander is successful in getting Congress’ attention, the issue promises to present a challenge for elected officials and candidates running in 2012.

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