Caterpiller threatens to leave Illinois

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    Mar 28, 2011 5:36 PM GMT
    This is only the beginning. One blogger makes the argument that Illinois is in a worse shape than Portugal given that businesses are far more likely to leave Illinois than Portugal (http://ktcatspost.blogspot.com/2011/03/portugal-illinois-and-caterpillar.html) such that even the higher tax rates may translate into fewer overall taxes as the tax base in Illinois shrinks.

    http://online.wsj.com/article/SB10001424052748704474804576224743712760936.html

    Caterpillar Urges Illinois to Roll Back Tax Increases

    Caterpillar Inc., suggesting that it could shift jobs out of Illinois, is prodding its home state to cut government spending and roll back tax increases.

    Doug Oberhelman, chief executive officer of the giant Peoria, Ill.-based maker of construction and mining equipment, protested against the state's tax and spending policies in a March 21 letter to Illinois Gov. Pat Quinn, a Democrat who took office in January 2009.

    In the letter, first reported Friday by the Lee Enterprises newspaper chain and provided to The Wall Street Journal Saturday, Mr. Oberhelman said other states have stepped up their efforts to lure Caterpillar investments since Illinois raised income tax rates in January.

    "I want to stay here," the letter said. "But as the leader of this business, I have to do what's right for Caterpillar when making decisions about where to invest. The direction that this state is headed in is not favorable to business, and I'd like to work with you to change that."

    A spokeswoman for Gov. Quinn said he "welcomes frank and open exchanges between the business community and government" and will discuss the matter with Mr. Oberhelman at a meeting soon.

    In January, the state's General Assembly passed a Quinn-supported bill imposing a four-year increase in income taxes designed to reap $6.8 billion in added revenue and help the state balance its budget. The legislation raised the flat rate for personal income taxes to 5% from 3% and for corporate taxes to 7% from 4.8%. In 2015, both taxes are set to decline but remain above the prior rate.

    Mr. Oberhelman enclosed letters from governors or other officials in Texas, Nebraska, Virginia and South Dakota, all citing the recent Illinois tax increase and urging Caterpillar to invest in what they described as more business-friendly environments.

    "If Illinois doesn't want your business, Texas does," wrote Rick Perry, the governor of that state.
    The governor of Nebraska, Dave Heineman, wrote: "In Nebraska, we balance our budget by controlling spending, not by raising taxes."
  • FRE0

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    Mar 29, 2011 5:15 AM GMT
    Perhaps states should, like unions, organize so that large companies would not be able to play one state against another to get the lowest possible taxes.
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    Mar 29, 2011 5:21 AM GMT
    FRE0 saidPerhaps states should, like unions, organize so that large companies would not be able to play one state against another to get the lowest possible taxes.


    States could also focus on good fiscal management. The problems in Illinois are of their own doing.
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    Mar 29, 2011 9:04 AM GMT
    riddler78 said
    FRE0 saidPerhaps states should, like unions, organize so that large companies would not be able to play one state against another to get the lowest possible taxes.


    States could also focus on good fiscal management. The problems in Illinois are of their own doing.


    That's fiction and you know it. The primary driver of fiscal problems in the states is the recession, which significantly lowered revenues while also creating an increased demand for services. Certainly some states were in better fiscal shape to begin with but that doesn't change the primary cause of their fiscal crises.

    Also, I find it remarkable that you support a business' decision to play hardball to get concessions from the state while also wanting to deny that same right to public workers. icon_rolleyes.gif
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    Mar 29, 2011 12:35 PM GMT
    Christian73 said
    riddler78 said
    FRE0 saidPerhaps states should, like unions, organize so that large companies would not be able to play one state against another to get the lowest possible taxes.


    States could also focus on good fiscal management. The problems in Illinois are of their own doing.


    That's fiction and you know it. The primary driver of fiscal problems in the states is the recession, which significantly lowered revenues while also creating an increased demand for services. Certainly some states were in better fiscal shape to begin with but that doesn't change the primary cause of their fiscal crises.

    Also, I find it remarkable that you support a business' decision to play hardball to get concessions from the state while also wanting to deny that same right to public workers. icon_rolleyes.gif

    You actually don't believe public employee unions and Democrats have any responsibility? I don't know Illinois in detail, but I do know California and the public employee unions and Democrats with entitlements and business hostile laws are not the only problem, but they are a BIG part of the problem, and anyone who doesn't understand that is blinded by their politics.
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    Mar 29, 2011 2:54 PM GMT
    Christian73 said
    riddler78 said
    FRE0 saidPerhaps states should, like unions, organize so that large companies would not be able to play one state against another to get the lowest possible taxes.


    States could also focus on good fiscal management. The problems in Illinois are of their own doing.


    That's fiction and you know it. The primary driver of fiscal problems in the states is the recession, which significantly lowered revenues while also creating an increased demand for services. Certainly some states were in better fiscal shape to begin with but that doesn't change the primary cause of their fiscal crises.

    Also, I find it remarkable that you support a business' decision to play hardball to get concessions from the state while also wanting to deny that same right to public workers. icon_rolleyes.gif


    That's ridiculous. You don't see the difference between a monopoly over a resource - in this case the unions versus the ability to compete for businesses to stay? You would rather Caterpillar be forced to stay in the state?

    As for the fiscal problems Illinois faces itself, recessions and downward economic times happen. You act as if this was just some one time event when in the years preceding, spending vastly exceeded the rate of economic growth in the state when that is exactly the opposite of how Keynesian economics should work. As an advocate of Keynesian economics, did you forget the side of the equation that governments should get leaner during the good years and only remember the part where they're supposed to spend during the bad ones? They currently project that the new taxes will bring in $6billion. If they're lucky it will this year, but I'm going to bet that next year it will change.

    This _is_ a problem of their own making.
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    Mar 29, 2011 3:22 PM GMT
    riddler78 said
    Christian73 said
    riddler78 said
    FRE0 saidPerhaps states should, like unions, organize so that large companies would not be able to play one state against another to get the lowest possible taxes.


    States could also focus on good fiscal management. The problems in Illinois are of their own doing.


    That's fiction and you know it. The primary driver of fiscal problems in the states is the recession, which significantly lowered revenues while also creating an increased demand for services. Certainly some states were in better fiscal shape to begin with but that doesn't change the primary cause of their fiscal crises.

    Also, I find it remarkable that you support a business' decision to play hardball to get concessions from the state while also wanting to deny that same right to public workers. icon_rolleyes.gif


    That's ridiculous. You don't see the difference between a monopoly over a resource - in this case the unions versus the ability to compete for businesses to stay? You would rather Caterpillar be forced to stay in the state?

    As for the fiscal problems Illinois faces itself, recessions and downward economic times happen. You act as if this was just some one time event when in the years preceding, spending vastly exceeded the rate of economic growth in the state when that is exactly the opposite of how Keynesian economics should work. As an advocate of Keynesian economics, did you forget the side of the equation that governments should get leaner during the good years and only remember the part where they're supposed to spend during the bad ones? They currently project that the new taxes will bring in $6billion. If they're lucky it will this year, but I'm going to bet that next year it will change.

    This _is_ a problem of their own making.


    Your "monopoly" argument is really silly. I can't even begin to explain how silly. Of course, I don't think Catepillar should be forced to stay in a particular state, but you refuse to recognize the fallacy in your argument that businesses should be able to both individually and collectively (through Chambers of Commerce, business associations, etc.) pressure a state to give them concessions (tax breaks, subsidies, etc.), but state employees should not be.

    Further, I am in full agreement that state's should save money and be lean in good times to have the ability to either borrow or spend reserves in bad times. But that isn't incompatible (as Connecticut and New York demonstrate) with recognizing public employees right to unionize.
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    Mar 29, 2011 3:35 PM GMT
    Christian73 saidYour "monopoly" argument is really silly. I can't even begin to explain how silly. Of course, I don't think Catepillar should be forced to stay in a particular state, but you refuse to recognize the fallacy in your argument that businesses should be able to both individually and collectively (through Chambers of Commerce, business associations, etc.) pressure a state to give them concessions (tax breaks, subsidies, etc.), but state employees should not be.

    Further, I am in full agreement that state's should save money and be lean in good times to have the ability to either borrow or spend reserves in bad times. But that isn't incompatible (as Connecticut and New York demonstrate) with recognizing public employees right to unionize.


    Really? You're conflating the powers of a local Chamber of Commerce / business association with the powers of a union which _is_ a designed to be a labor monopoly? While they push for influence, that's not anywhere near the powers of any of the associations we belong to.

    You are (presumably purposely) confusing the issue when you combine the issues of unionization and the state's culpability in its financial problems. The public purse is the responsible of the state - not the unions. That the state caved to union demands in good years while being supported in no small part by the organization and political financial contributions of unions and their membership is still the responsibility of the state. Unions, however, should not view their negotiated agreements with predecessor administrations as unbreakable.

    Unions should be allowed to organize - no one is denying them that right - and the right to freedom of association. The question is whether or not they have the right to collective bargaining which is an entirely separate issue.
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    Mar 29, 2011 4:25 PM GMT
    riddler78 said
    Christian73 saidYour "monopoly" argument is really silly. I can't even begin to explain how silly. Of course, I don't think Catepillar should be forced to stay in a particular state, but you refuse to recognize the fallacy in your argument that businesses should be able to both individually and collectively (through Chambers of Commerce, business associations, etc.) pressure a state to give them concessions (tax breaks, subsidies, etc.), but state employees should not be.

    Further, I am in full agreement that state's should save money and be lean in good times to have the ability to either borrow or spend reserves in bad times. But that isn't incompatible (as Connecticut and New York demonstrate) with recognizing public employees right to unionize.


    Really? You're conflating the powers of a local Chamber of Commerce / business association with the powers of a union which _is_ a designed to be a labor monopoly? While they push for influence, that's not anywhere near the powers of any of the associations we belong to.

    You are (presumably purposely) confusing the issue when you combine the issues of unionization and the state's culpability in its financial problems. The public purse is the responsible of the state - not the unions. That the state caved to union demands in good years while being supported in no small part by the organization and political financial contributions of unions and their membership is still the responsibility of the state. Unions, however, should not view their negotiated agreements with predecessor administrations as unbreakable.

    Unions should be allowed to organize - no one is denying them that right - and the right to freedom of association. The question is whether or not they have the right to collective bargaining which is an entirely separate issue.


    You can keep using the word "monopoly" until you're blue in the face, but it's not going to give any additional credence to your point. I'm fairly certain you'd be on the anti-trial lawyers side of the argument over tort reform. What are local and national bar associations if not the same as a COC? What about the American Medical Association? If you think that these groups and local chambers of commerce don't exert enormous influence on politics, you're either delusional or purposely being naive.
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    Mar 29, 2011 4:36 PM GMT
    Christian73 saidYou can keep using the word "monopoly" until you're blue in the face, but it's not going to give any additional credence to your point. I'm fairly certain you'd be on the anti-trial lawyers side of the argument over tort reform. What are local and national bar associations if not the same as a COC? What about the American Medical Association? If you think that these groups and local chambers of commerce don't exert enormous influence on politics, you're either delusional or purposely being naive.


    The AMA is a union in effect because you must belong to the organization to be a doctor and they control licensing (if I recall). That's not the case for local chambers of commerce and business groups who tend to pay some paltry fee of a few hundred to a thousand dollars but where the business association is unable to dictate how your business is run.

    I'm curious if you know the whole reason for the anti-trust act and why unions were granted exemptions. It's a monopoly in purpose and by definition. When you're forced to join an organization or that organization has control over your livelihood / key resource, it's a monopoly. As for being delusional and naive? You seem to be knowingly attempting to play word games in an attempt to obfuscate what is obvious to (almost apparently) all.

    To consider it another way, if unions aren't a monopoly over that resource, why can the state not just hire other workers? The whole reason a union has power is that they control labor resources or a specific group of resources. I see you've dropped the pretense that the state doesn't have (the primary) responsibility for this mess.