Take a look at your pay stub. In all but six states, workers will see a deduction for state income taxes. You probably expect that money to finance public schools, the state university and college system, law enforcement and the other services that businesses and individuals rely on. Mostly it does, but in a growing number of states, your state income taxes will also be increasing the profits of your employer.
You read that right. Many employers in nineteen states can now keep state income taxes withheld from paychecks.
That doesn't even seem possible. How can companies keep money designated for state taxes? I must have read that wrong.
You read that right. Many employers in nineteen states can now keep state income taxes withheld from paychecks. General Electric, Goldman Sachs and Procter & Gamble have these deals, along with a host of foreign firms from the German computer maker Siemens to the Swedish appliance maker Electrolux and a host of Canadian, European and Japanese banks. In all more than 2,700 companies get to pocket the state income taxes withheld from some of their workers' paychecks.
I knew states and municipalities made all kinds of shady deals to get sleazy companies to come to or stay in their locations. I know they get all kinds of tax breaks by holding out the promise of new jobs, or threatening to take them away. But actually keep the money that you pay to the state? Holy Shit! That is fucking insane!
In Illinois, for example, six big companies made deals with the state to pocket half or all of the state income taxes paid by their workers over ten years. Ford got a deal in 2007 by threatening to close an automobile assembly plant. In 2009, when the economy was in the worst shape in eight decades, Chrysler and Mitsubishi used threats of assembly plant closings to get similar deals.
Navistar, maker of big diesel trucks for industry and the military, threatened to go to Alabama or maybe Iowa. In return for staying put, Navistar will pocket almost $65 million. The big winner, though, was Motorola Mobility, the cell phone maker. Just for promising not to move out of state and take three thousand jobs with it, Motorola gets to siphon $136 million from the paychecks of its
well-paid high-tech workers.
Sure, that money could have been used to build a couple schools, or hire some cops or whatever, but the well-lined pockets of the Motorola corp. is another way you could go. That's probably just as good.
As if to make this transaction all the more interesting, Motorola Mobility agreed to be acquired by Google soon after the state made the big tax deal. The Motorola board then paid its CEO, Sanjay Jha, to go away. He received $66 million. Thus, Illinois taxpayers underwrote his golden parachute, which amounted to roughly half the value of the worker taxes flowing to Google.
Oh, the taxpayers of Illinois are paying their taxes to Google? Oh, good for them, I know how much Google has been struggling lately, what with the whole internet fad having passed and. . . what? Really? It's just this blog? Everybody is still using the internet? For what?