Friday, April 29, 2016

Hoisted By Own Petard

State Supreme Court Justice David Prosser to retire

I'm assuming (following the same logic used in denying Merrick Garland a hearing) Scott Walker and Wisconsin Republicans will not search for a successor to fill Justice Prosser's seat. I'm sure they will leave it open for the next governor to decide.

Sunday, April 10, 2016

The Convention Center Cabal

The Milwaukee Business Journal had a recent cover story discussing Milwaukee's hotel growth. Other than talking about hotels, the main thrust of the article seemed to be that - to fill all these new hotel rooms Milwaukee needs to step up their convention center game. The "if you build it they will come" mantra is alive and well with the convention center interests.

But, as experience has shown, the number of conventions and convention-goers has been falling the past few decades. With faltering demand already in place, increased supply drives the value down for everyone. A classic case of a race to the bottom. Maybe it's a good thing Milwaukee hasn't wasted hundreds of millions on pointless convention center expansion.

From Governing magazine's The Great Convention Center Bailout:
“A lot of the over-building is a result of local business leaders who see the centers as a bulwark against declining property values in cities,” he [Heywood Sanders, professor of public administration at the University of Texas at San Antonio] says. Throw in consultants who often play up the impact of a convention center, says Sanders, and the result is an overbuilt market.
I wrote about this topic in 2014:
As Steven Malanga reports, in The Convention Center Shell Game, "A vast expansion of Chicago’s McCormick Place, costing $1 billion in the mid-1990s, didn’t prevent a drop in that city’s share of major conventions... Another word of warning: city-commissioned studies almost always wind up recommending convention centers—meaning that the industry of consultants who churn out such studies has a pretty lousy track record, considering the long list of underperforming centers around the country."
Chicago is the biggest convention center city in America. If a billion-dollar investment can't prevent their slide, does anyone plausibly think a different outcome will occur in Milwaukee?
And, the numbers in the Business Journal article show that, even though we haven't expanded the convention center (which is deemed so necessary), hotel occupancy rates have improved. We've built more hotels and more of those rooms are being used even though Milwaukee hasn't upgraded the convention center. This increase in hotel room occupancy (from 58% in 2010 to 62% in 2015) has occurred alongside declining convention center events (from 78 events in 2014 to 53 in 2016). So, it may be more accurate to believe that investing dollars into the convention center would be a drain on other more effective economic activities in Milwaukee.

A University of Wisconsin-Milwaukee (UWM) Center For Economic Development study explained:
Whatever the original economic folly of Miller Park and the Midwest Airlines Center, what’s done is done: both facilities exist and will certainly operate for the foreseeable future. For the purposes of this study, there is no point in reopening a historical debate about whether public dollars should have been spent on these facilities. However, down the road, as part of a city strategy to build a chimerical tourist industry in Milwaukee, taxpayers once again may be called upon to provide public funding for an expanded convention center, or perhaps a new arena for a local professional sports team. Such expenditures should be scrupulously avoided: tourism has been a losing economic development strategy for Milwaukee as a whole, and for the inner city, tourism investments have represented a huge 'opportunity cost’ of funds that could have been invested in inner city economic renewal.
For Further Reading:
Beware Of The Economic Development Hucksters

Sunday Reading

What Is A "Good Job?"
The Quiet, Vicious Racism Of Scott Walker's Wisconsin
The Real Lesson From $15? America's Trickle-Down Experiment Has Failed
Remembering Milwaukee's Socialist Party History
Let's Dispel Once And For All This Fiction That Sanders Doesn't Know How To Break Up Banks
Outraged By Kansas Justices' Rulings, Republicans Seek To Reshape Court
Republicans And Voter Suppression
Don't Dismantle Government - Fix It
Republicans Lied In Wisconsin: Here's How You Know The State's Voter ID Law Is A Complete Sham

Friday, March 25, 2016

Wisconsin's Electricity Rates Are Highest In Midwest

Who Will Save The Hedge Funds?

It's great to offer two sides to a story, broadly speaking. But some stories just aren't true. For some odd reason, the Journal Sentinel thinks these stories still need to be told. Myth making at its worst; great job Journal!

I'm referring here to a recent opinion piece in the Journal from Brett Healy, president of the MacIver Institute, and Patrick Gleason, director of state affairs of Americans for Tax Reform - Bipartisan push for higher taxes trouble for Wisconsin companies

They are particularly upset over the possibility of "raising taxes on capital gains, particularly capital gains earned by private equity fund managers, commonly referred to as carried interest."

Who will save the hedge funds?!

They make unsubstantiated and dubious claims about the economic impact of private equity firms, followed by the well-worn double-taxation whine.
Capital gains taxes are a type of double taxation, and investment income taxes are among the most economically damaging forms of taxation.
Yes, taxing people for making money off of other money is so mean.
Also, the attempt to raise taxes on carried interest is the first step toward the long-held progressive goal of taxing investment income at the higher rates at which wages are taxed.
So, inherited wealth, which is often simply reinvested to achieve capital gains, should be taxed at a lower rate than income earned by people whom are actually working, building and doing something?
Proponents of raising taxes on carried interest often talk about tax parity and fairness, but note they never want to reduce wage income tax rates to the lower capital gains rate in order to achieve this. That's because the goal for most of those targeting private equity is to raise taxes on net in order to grow the size of government.
No. You can't reduce income taxes to lower the capital gains rate because we wouldn't be able to fund government. It's not about growing the size of government. It's about living in a civilized society with a working and equitable infrastructure. We need Social Security, Medicare, roads, bridges, trains, airports, fire fighters, police, parks, museums, universities, a military, and on and on. It's about paying the bills to assure our quality of life.

President Obama has reduced deficits and decreased the number of federal employees. That's leaner and meaner, not growing.

Yet, for this conservative, pro-business cabal, taxes can never be low enough on the wealthy, and the working masses should just get used to going without.
The belief that keeping the tax burden as low as possible promotes economic growth is supported by a large body of research.
Again. NO! Research, and the U.S.'s experience since the 80s, indicates the exact opposite of what the authors claim. Low rates have lead to slower growth, increasing income inequality and rising deficits.

As Dean Baker discusses:
...the desire to lower the tax rate on capital income as stemming from a desire to reduce "double taxation." The logic of this argument is that profits are taxed at the corporate level, so when they are taxed again at the individual level when they are paid out as dividends or lead to capital gains, this amounts to "double taxation." 
The problem with this logic is that the government gives individuals something of enormous value when it allows them to create a corporation as a legal entity. A corporation enjoys a wide range of privileges that these people would not have as individuals, most importantly that it allows them limited liability. This means that the individuals who own shares in the corporation are not liable for any harm the corporation may do beyond the value of their shares. 
We know that limited liability and other benefits of corporate status have great value because people choose to incorporate. They would not do so, and save themselves from having to pay the corporate income tax, if they didn't think the value of corporate status exceeded the burden of the tax. In this sense, the corporate income tax is a 100 percent voluntary tax, people opt to pay it in order to get the benefits of limited liability.
There is one other point that would have been useful to include in this discussion. Taxes affect the before-tax distribution of income insofar as they allow for a lucrative tax avoidance industry. To a large extent the private equity industry, which has created rich people like Mitt Romney and Peter Peterson, is about devising ways to raise corporate profits through tax avoidance. This is an important cost associated with having an excessively complex tax code. That is an important point that is always necessary to keep in mind in any discussion of the tax code.
The economic havoc that has been the Scott Walker administration is in part due to the fact that they have followed the playbook of the Healys and Gleasons of the world. Political apparatchiks whose proclamations have been debunked long ago. They can keep repeating their dead ideas (which has been going on for decades now), but we don't have to keep listening to it.

A bit of an aside: in the article, Healy and Gleason use $68 billion for the amount invested in Wisconsin by private equity since 2003, they claim this is an economic windfall for the state. Yet, later in the article, "Obama's budget indicates that this damaging tax increase would raise just over $2 billion per year in additional tax revenue, which is basically a rounding error in a more than $3 trillion federal budget." So, Obama's increase would raise $2 billion, which is just a rounding error. But private equity's roughly $5 billion per year investment in Wisconsin is an economic game-changer.

For Further Reading:
Warren Buffett Is Right, the Wall Street Journal Is Wrong
Raise Capital Gains To Lower Income Inequality

Capital gain is an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short term (one year or less) or long term (more than one year) and must be claimed on income taxes. A capital loss is incurred when there is a decrease in the capital asset value compared to an asset's purchase price. 2. Profit that results when the price of a security held by a mutual fund rises above its purchase price and the security is sold (realized gain). If the security continues to be held, the gain is unrealized. A capital loss would occur when the opposite takes place.

Sunday, March 13, 2016

Stop Cryin' In Yer Beer

I've heard varieties of the "Obama hasn't done anything" idea spouted about in the media, from friends, by co-workers, etc.

Now, I wanted a more liberal agenda pursued, but nonetheless, I'm not blind to the fact that Barack Obama has accomplished very, very big things.

Government is shrinking, deficits are declining, employment is improving, health care inflation is subsiding, infrastructure projects have been completed nationwide ...

For Further Enlightenment:


Obama's top 10 accomplishments

Down With Success!

Only in America can the Republicans - the guardians of government efficiency and fiscal fortitude - score political points disparaging legislation that will save the taxpayers $1 trillion more than projected.

Saturday, March 12, 2016

Wingnut Sheriff Encourages More Violence

Fox's Favorite Wingnut Sheriff Encourages More Violence At Trump Rallies

America's Middle-Class Meltdown

America’s Middle-class Meltdown: Core shrinks to half of US homes

Walker Signs Vocational Education Teacher Measure

Gov. Scott Walker signed legislation Tuesday that will let districts hire vocational education teachers who do not hold traditional teachers licenses. ...
Critics, including the state Department of Public Instruction, the state's largest teachers union and university schools of education have raised concerns, saying the measure would lower the bar on teacher standards and create an uneven licensing system around the state.
How does lowering the bar for teacher licensing do anything to impact job growth in Wisconsin? So we can hire more under-qualified "teachers"? (But wouldn't this also imply that we'll be hiring less properly-licensed teachers?) Licensing standards are in place for a reason. We want teachers that have met certain requirements. 

Is this another Republican divide and conquer strategy aimed at the teachers union?

Through defunding and lowering qualification standards, Scott Walker is diminishing the quality of Wisconsin education.

Yet again, Wisconsin Republican policy choices seem to have nothing to do with moving Wisconsin forward. Rather, their legislation is a continual sludge of favors, paybacks, posturing and cronyism.

Wisconsin Reading

Scott Walker Destroyed His State: Wisconsin's Economic Cautionary Tale
Suburban Firms Moving Downtown To Attract And Keep Millennials
In College Column, Bradley Likened Abortion To Holocaust, Slavery
Who's Best On Budget And Taxes?
Wisconsin Uses Affordable Care Act But Rejects Funding For It
Milwaukee Faces Daunting Costs With Lead Water Pipes
Milwaukee County To Consider $184.3 Million, 10-Story Downtown Courthouse
Wisconsin's Pace Of Job Growth Continues To Trail Behind The National Average

Friday, February 26, 2016

From The Pinnacle To The Pit

For Further Reading:
Grammy Winning Band Ghost

Mitchell Park Domes

It's time to re-imagine the Mitchell Park Domes
If we can spend $250 million in public funds on a basketball arena whose owners will charge us dearly to enter, surely we can invest a much smaller amount in a green wonderland that’s truly public.

Thursday, February 25, 2016

Republican Public Policy Does It Again (And It's Not Good)

Poverty across Wisconsin reaches highest level in 30 years

Just a short list of the many Scott Walker failures:
  • Slow job growth
  • Budget deficits alongside giveaways and tax breaks for cronies
  • Costing Wisconsin millions by refusing to expand health care under the Affordable Care Act; leading to less people having health care
  • Increasing poverty
Scott Walker burst onto the scene and into the governor's mansion primarily on his self-proclaimed know-how for creating 250,000 new jobs. Wisconsin ranks 38th in private-sector job growth in 2015. So, we'll check that off as a failure on job creation.

Budget deficits were estimated at $1.5 to $2.2 billion when Walker first entered the governor's office. (The $3.6 billion estimate was from the Walker camp.) Legislative Fiscal Bureau analysis shows Wisconsin is back in the red for 2015-17, at $1.8 billion, which could grow to $2.2 billion. Wisconsin’s per-capita state debt has grown 2.9 percent during his tenure as governor, compared with a 0.34 percent decline nationwide over the same period, according to data compiled by Bloomberg. Looks like we're treading water here. But, Walker did come in claiming he was going to move hell and high water; I guess we'll have to check this off as a failure, too.

Walker's health care decision means that state taxpayers are paying more to cover fewer people in the BadgerCare Plus health plan. The decision to reject that federal money is estimated to have a net cost to the state of more than $100 million in the current two-year budget. The federal money would have allowed the state to cover an estimated 84,700 more people through BadgerCare. Failure ... check.

And now, due to the tax cuts and slow job growth, poverty is on the rise. Is that another failure? It sure is ... check.

Deregulation, tax cuts, supple-side economics, anti-unionism, anti-science, anti-environmentalism, privatized healthcare and underfunded education - the Republican policy playbook - are not the policy prescriptions for success. Republican legislation has proven this again and again.

For Further Reading:
Budget woes complicate Gov. Scott Walker's White House ambitions
Wisconsin Is About To Make It Easier For Debt Collectors To Go After Consumers
Scott Walker Approves Obscure Tax Break For Furniture Company, Quickly Collects Large Campaign Donation

Monday, February 15, 2016

Here's To The Debtors

Plan to use Milwaukee County debtors for arena subsidy back
"I think it's pretty sneaky," said Rep. Christine Sinicki, who supported the Bucks proposal last summer but is leaning toward opposing this latest bill. 
"They got the Bucks bill through by taking (the debt collection) out. Now suddenly they're bringing it back," she said.

The controversy over the debt plan has added overtones for the April election in which Milwaukee County Executive Chris Abele, a supporter of the proposal, faces state Sen. Chris Larson (D-Milwaukee), an opponent.

Larson and other critics of the debt plan have said it amounts to funding an arena for the Bucks' billionaire owners in part by taking more money from people who often aren't able to pay their current debts. They're also worried about the effect it could have on county offices linked to these debts. Currently, most of this debt is the responsibility of County Treasurer David Cullen and Clerk of Courts John Barrett, who both oppose the legislation.
Abele has said that blocking the debt plan amounts to penalizing people who are paying their property taxes or court fines to help those who aren't. 
Under the bill, Abele could act without county board approval to pass most county debts over for collection to the state Department of Revenue, which has additional collections tools.
Abele is such a tool.

"Blocking the debt plan amounts to penalizing people who are paying their property taxes or court fines to help those who aren't."


What about all the taxpayers (the majority) that don't want their tax dollars going to billionaire, team owners?

Any politician that signs off on his constituents being on the hook for a new athletic arena is penalizing his constituents.

Debtors need to pay their bills. But if you're a billionaire, just find a compliant politician to push your costs off onto his/her constituents.

Scott Walker Is A Colossal Embarrassment

Gov. Scott Walker issues executive order to block power plan
In an executive order Monday, Governor Scott Walker prohibited state agencies, departments, boards, commissions, or any of their agents from developing or promoting the development of a state plan to comply with the 111(d) Rule until the expiration of the stay issued by the U.S. Supreme Court.
Wouldn't it be terrible if Wisconsin, a state known for its beautiful environment, was at the forefront of the green economy and a leader regarding climate change?

Such action, being proactive about the environment, might actually reverse the abysmal effects Walker has had on Wisconsin's economy.

More jobs, a cleaner environment, who wants that? Not Scott Walker.


Saturday, February 13, 2016

11 Countries with Universal Healthcare and Free College

11 Countries with Universal Healthcare and Free College

Country, Population ("Best Countries" Ranking):

Sri Lanka - 20 million (41)
Brazil - 200 million (20)
Argentina - 41 million (40)
Luxembourg - 543,000 (14)
Spain - 46 million (16)
Germany - 80 million (1)
Greece - 11 million (26)
Finland - 5 million
Sweden - 9 million (5)
Denmark - 5 million (10)
Norway - 5 million

Total - 422,543,000

United States, 319 million (4)

There are those who comment that the United States can't afford free health care and education, it can't happen, and it's impossible.

They are wrong. 

Health care, education and infrastructure can take precedence over bombs, tax cuts and deregulation.

Deunionization In Wisconsin And Metro Milwaukee

Something tells me the decline in unionization has contributed to Wisconsin's terrible economic performance. I do know the accelerated decline in unionization and the terrible economy in Wisconsin are both the result of know-nothing Scott Walker.

For Further Reading:

7 States Doing Worse Than The Rest

For Further Reading:

Monday, February 8, 2016

Large Tax Cuts Haven't Spurred Job Growth

For Further Reading:

Under Sanders, Income & Jobs Would Soar

Under Sanders, income and jobs would soar, economist says
If Sanders became president -- and was able to push his plan through Congress -- median household income would be $82,200 by 2026, far higher than the $59,300 projected by the Congressional Budget Office.

In addition, poverty would plummet to a record low 6%, as opposed to the CBO's forecast of 13.9%. The U.S. economy would grow by 5.3% per year, instead of 2.1%, and the nation's $1.3 trillion deficit would turn into a large surplus by Sanders' second term... 
"Like the New Deal of the 1930s, Senator Sanders' program is designed to do more than merely increase economic activity," Friedman writes. It will "promote a more just prosperity, broadly-based with a narrowing of economy inequality." ... 
Friedman, however, argues that Sanders' plan would be more stimulative because it is pouring money into the economy, as opposed to cutting taxes. Several of Sanders' proposals -- such as spending $1 trillion on infrastructure -- will happen in the first few years of his administration.

Sunday, January 31, 2016

Union Dues

Another Wisconsin Corporate Welfare Failure

Caterpillar (and former Bucyrus) has received $40 million in state and local awards (subsidies) in Wisconsin. [source]

Caterpillar closing Wisconsin plant, expects declining 2016 sales in mining and $400M more in restructuring costs

The Bigger-Is-Better Racket

Since Reaganomics began eviscerating the middle class, mergers and a bigger-is-better attitude has dominated our development and economic thinking. Economies of scale were going to trickle down riches on each and every one of us.

But, it turns out, much of this was just merely oligopoly power solidifying itself. Big companies became too big to fail, and the wages of most workers stagnated.

In our haste to believe that all we'd learned from the Great Depression was wrong, we marched ahead cutting taxes, cutting regulation, getting government out of the way of all-knowing business. Zoning laws changed and development intensified.

The small mom-and-pops, which were the hubs of smaller communities throughout the nation, were inefficient and antiquated. Travel patterns were changed. The off-ramp economy was the path to prosperity. A new automobile-dominated society was deemed superior. Big boxes and one-stop shopping were supposed to transform daily life, for all, for the better.

But what happens when the oligopoly changes the lifestyle in a community, only to desert it years later?

First, the traffic to-and-from these megaplexes disrupts as much as it invigorates:
Traffic and noise depress property values in nearby neighborhoods. More traffic in- creases the cost of local government services, such as road maintenance and police. [source]
Many of these big boxes also use their size and strength to avoid taxation:
As one example, take Walmart, the largest among them, which looks for tax loopholes wherever it can find them. “For every kind of tax that a retail company would normally pay or remit to support public services, Walmart has engineered an aggressive scheme to pay less and keep more,” found a 2011 report by the non-profit research organization Good Jobs First. These include using its fleet of lawyers to systematically challenge its property tax assessments, and gimmicks such as deducting rent payments made to itself through captive real estate investment trusts. Good Jobs First calculated that these tactics cost state and local governments more than $400 million a year in lost revenue, and concluded, “Walmart may be more of a fiscal burden than a benefit to many of the communities in which it operates.”
Much of the cost for the employees at these big boxes is placed upon the locality and the state:
Large numbers of big-box employees rely on Medicaid, food stamps, and other public assistance programs to get by. Several states have reported that their Medicaid rolls are now swollen with su- perstore workers. In 2005, for example, Massachusetts disclosed that some 9,500 Wal-Mart, Home Depot, and Target em- ployees and dependents were receiving publicly-funded health care at an annual cost to taxpayers of over $12 million.

Perhaps most disturbing, researchers at Penn State University, after controlling for other factors that influence poverty, found that counties that gained Wal-Mart stores during the 1990s fared worse in terms of family poverty rates than those that did not. [source]
It's also been found that these big boxes hurt the local job market:
As these businesses are forced to down- size or close, the resulting job losses typi- cally equal or exceed the number of new jobs created by the big-box store.This was recently shown in a large-scale study con- ducted by Univ. of California economist David Nuemark and his colleagues at the Public Policy Institute of California. The study examined 3,094 counties across the U.S., tracking the arrival of Wal-Mart stores between 1977 and 2002.

The study found that the opening of a Wal- Mart led to a net loss of 150 retail jobs on average, suggesting that each Wal-Mart em- ployee replaces approximately 1.4 workers at other stores.
And when they leave, they typically leave blight behind. As the Institute for Local Self-Reliance discovered:
These stores tend to remain vacant because retailers often continue paying rent or take other steps to block competitors from occupy- ing the site. Clauses in many big-box lease agreements forbid property owners from leas- ing the building to another company without the original tenant's approval.
They come to town, change the traffic flow and the character of the place, they push many of the costs of their employees onto the locality and the state, they avoid their fair share of taxes, they pocket a financial windfall, and then they leave town.

When it comes to economic development, place-making and community, bigger isn't always better.

For Further Reading:
Walmart: It Came, It Conquered, Now It's Packing Up & Leaving
The Perils Of Walmart Dependence
Big, Empty Boxes
Impact of Big-Box Stores on Taxes and Public Costs

Where Are The Conservative Calls For Accountability For Corporate Welfare Recipients?

The rejiggered corporate structure will allow the new company to reel in $150 million in tax savings. 
However, saving taxes was not the primary motivator for the deal, the company said. Though the merger includes the tax shift, "it's not about the foreign domicile," said company spokesman Fraser Engerman. "This is all about strategy."
Hillary Clinton Slams Johnson Controls-Tyco Deal
"Here is as direct an example of what's wrong with the thinking and acting of an American corporation that we could get," Clinton said. 
She told supporters at a bowling alley here that "I will do everything I can to prevent this from happening, because I don't want to see companies that thrive, use the tax code, the gimmicks, the evade their responsibility to support our country." 
Clinton said that during the economic and financial crisis of 2008, Johnson Controls was among the companies "that begged the administration and the Congress to help bail out the auto industry." 

Said Clinton: "Johnson Controls goes to Washington, says, 'Please American taxpayers, save us!' 
"And the auto industry, the suppliers, the jobs, were saved. OK. But just in the last few days Johnson Controls announces it's going to pretend to sell itself to a company in Europe to escape paying taxes to the United States government. It's called an IN-version. I think it should be called a PER-version." 
Clinton told the audience that the company was happy to accept their help during the crisis. 
"Now they want to move overseas for the sole purpose of escaping their fair share of taxes to support what made them be a company that was successful in the first place — the rule of law, the contract system, our judicial system, the support we give to training people, all that you and I have contributed in previous generations. They are willing to walk away in order to pay a lower tax instead of doing what they should to support our country to grow and be prosperous and strong in the future and it is wrong." 
Clinton added: "We've got to take all of these abuses on...We have to go after everybody who is trying to undercut American prosperity and America's future."
 Johnson Controls Subsidy History
Subsidy SummarySubsidy ValueNumber of Subsidies
Federal (grants and allocated tax credits)$309,118,82313
For Further Reading:

Sunday Reading

Confusion About The Financial Crisis Won't Die
Will Bill Privatize Water Utilities?
Is Ted Cruz Right About The Federal Reserve & The Great Recession?
Bill Would Limit City Control Of Development
Zoning Laws Transfer Wealth In The Wrong Direction
The Case Against Bernie Sanders Is Dumb
Can New Approach End Gerrymandering?

Union Decline Leads To Wage Decline For All

5 States Where the Middle Class Is Being Destroyed
Wisconsin: -5.7% 
The clear winner (or loser) in the race to the bottom has been Wisconsin, losing 5.7% of its middle class households since 2000. Average median income has dropped by roughly $9,000 annually, and costs of living have gone up as well. There have also been many political battles that have not worked in the middle class’s favor. Governor Scott Walker gutted many of the state’s unions — which has a big effect on the middle class — and all signs seem to indicate that he will aim to implement similar policies. Like Ohio, Wisconsin’s makeup was particularly vulnerable to a recession, and the proof is in the numbers.
Union Membership In Wisconsin Plummets In Wake Of GOP Measures
In 2015, 8.3% of Wisconsin workers, or 223,000 in all, were members of unions. That was down sharply from the 306,000 people, or 11.7% of the state’s workforce, who belonged to unions in 2014.

For Further Reading:

CEO Pay, Unionization & The Middle Class
Unions, Public Sector & Wages

Saturday, December 19, 2015

Wisconsin Reading

Minnesota, Wisconsin Diverge As Twin Cities Outpace Northern Peers
Scott Walker Dramatically Rewrites Election Rules In Wisconsin
Wisconsin Ranks 32nd In Five-Year Job Growth Report
Medicaid Expansion Would Save State $1 Billion
Walker's Assault On Open Records
Walker Signs Bills Dismantling GAB, Overhauling Campaign Finance Law

Walker's Grasp On Reality Even More Tenuous Than Previously Thought

In an article for the Journal Sentinel, The Wisconsin Comeback, Scott Walker repeated familiar talking points and platitudes. According to Walker, Wisconsin is flourishing.

The Journal Sentinel has their own editorial, Another Lousy Wisconsin Jobs Report and Little Action on Job Creation.
A new government report shows that our state ranked 32nd in private-sector job growth among the 50 states in the five-year period that ended in June. That's the entire recovery period since the last recession. 
Private-sector hiring in Wisconsin grew just 7.6% during those five years, far behind the national growth of 11.2% and behind nearby Midwestern states. Michigan, Indiana, Minnesota, Ohio, Iowa and Illinois all did better.
Joel Rogers (the Sewell-Bascom Professor of Law, Political Science, Public Affairs and Sociology at the University of Wisconsin-Madison, and director of the Center On Wisconsin Strategy) added:
According to a recent report from the Pew Research Center, Wisconsin now leads the nation in destroying its middle class. Defining "middle-class households" as those with income 67% to 200% of their state's median, Pew showed Wisconsin leading all other states in the 2000-2013 period in its rate of loss...
Median worker wages here, for example, are now $17.38 an hour. In inflation-corrected terms, that's up only 71 cents from 35 years ago — equivalent to an increase of only 2 cents a year — despite a near doubling of worker productivity over the period. Job growth has been pathetic, among the worst in the nation. If Wisconsin had merely kept pace with the rest of the country's recovery from the Great Recession, we'd have 90,000 more jobs today than we do.
And job quality is through the floor. More than a quarter (27%) of Wisconsin workers now make $11.55 or less an hour. A full-time year-round job at that wage is not enough to keep a four-person family out of poverty, even on America's distinctively stingy definition of the poverty line.
In the sense that 'comeback' usually has a positive connotation, I don't think 'comeback' means what Scott Walker thinks it means. Hopefully Wisconsin can comeback from the Walker 'comeback'.

Saturday, December 5, 2015

Wisconsin Reading

Scott Walker's Food Stamp Cuts Are Coming To A State Near You
In Wisconsin, Little Conserved By Radical Conservatives
Fewer Teachers, Less Experienced Teachers Mean Challenges for Wisconsin's Public Schools
Wisconsin's Public Sector is Leanest in Two Decades
Wisconsin Has Far Fewer State Employees Than Most States
Scott Walker Signs Bill Limiting Doe Probes As Records Are Released
The Use and Disclosure of Personal Email in the Walker Administration
"Wisconsin is Moving in the Right Direction"
Wisconsin Government Revenue is Not Out of Line
Slay The Wisconsin Gerrymander
Wisconsin Not High in Taxes, Spending
WEDC May Have Illegally Awarded $21 Million in Tax Credits
Wisconsin's Position Again Inflated in a Tax Ranking
Discovery of Census Flub Tempers State's Tax Hell Status

More On The Milwaukee Bucks Stadium Saga

It's time for the NBA to end its arena blackmail scam
Why Bucks' Entertainment District May Fail
Milwaukee Is Keeping Bucks, But Would It Have Been Better Off Without Them?
No, It's Not Cheaper To Keep Them
A Tale of Three Sports Facilities

Down With Wisconsin Air Quality

Brad Schimel Joins Suit Opposing Carbon Emission Limits
Wisconsin Joins Clean Air Rules Lawsuit

Interest Rates, Bureaucracy, Unionization & Inequality

Hike They Shouldn't
Principled Populism
Relationship Between US Productivity & The Decline in The Labor Share of National Income
Most Americans Get 'Free Stuff' From The Government
Hail to the Pencil Pusher
Union Power & Inequality


Molson Coors to buy full ownership of MillerCoors for $12 billion
A-B InBev to pay $107 billion to buy SABMiller

Saturday, October 31, 2015

GOP Zombies Lumber On

There is a zombie party, but it's not the GOP
"Dysfunction" was hardly the scene in the House last week as Wisconsin Rep. Paul Ryan took hold of the speaker's gavel — an act unthinkable even to Ryan just a few weeks prior. The young, attractive Ryan always has been seen as the future of the Republican Party, able to bridge the gap between the GOP's more ardent wing and those more interested in governing. (In the end, only seven of the Tea Party's "Freedom Caucus" members voted against Ryan, proving the group's opposition to Ryan was overblown.)
WOW. Talk about trying to polish a turd. Nobody revises history quite like the Republicans.

Even Schneider, in the article, writes that Ryan becoming speaker was unthinkable weeks ago. But the Republicans did what they do best when between a rock and a hard place, a well-staged photo opportunity. Hence, even Schneider doesn't have much more to say about Ryan other than "young, attractive." Ryan's previous attempts at serious policy analysis have been shown to be nothing more than flim flam.

For the past few weeks (more so than usual), dysfunction was the entire scene for the Republicans. 20 or so presidential candidates, a Tea Party caucus holding the rest of the party hostage, and seemingly no one wanting to become the new speaker.

Paul Ryan was the only Republican left that the party felt the public may actually pay some attention to at this point. Because Ryan and Rubio are younger, the Republican party is alive and well, according to Schneider.

Schneider details how the Republican party still has a hold on America and the demise of the party is premature:
In fact, Republicans — y'know, the party that has ceased to function — currently hold majorities in the U.S. House, Senate and claim 31 governorships.
He forgets to mention much of this is due to gerrymandering and voter suppression tactics. For Schneider, just like his new hero Paul Ryan, details aren't that important.

I know this is the Republican playbook - claim the opposite of reality and always act as if everything is just what the Republicans planned and wanted (and Schneider's sole purpose is to regurgitate some version of this fantasy in every article he writes). But, aren't even the conservatives getting tired of the willful distortion of reality?

Weekend Reading

The Real Reason Germs Spread in the Winter
The Links Between Gut Microbes and the Brain
The Myth of Big, Bad Gluten
The Religious Right's Big Lie About the Founding of America
You're Not Irrational, You're Quantum Probabilistic
American Failure: The 401(K)
The 401(K) Crisis is Getting Worse
Inequality in Our Retirement Accounts
The Rage of the Bankers
Why Does Wall Street Want Higher Rates?
The Stock Market is Not the Economy
The Case Against Raising Interest Rates Before Wage Growth Picks Up
The Failed Reaganomics Experiment In Kansas Keeps Getting Worse
Red States Spent $2 Billion in 2015 to Screw the Poor

Friday, October 23, 2015

Another Wisconsin Corporate Welfare Failure

Harley-Davidson plans job cuts amid decline in quarterly earnings

Here's a link to Harley-Davidson's subsidy bonanza over the years.

Wisconsin gave Harley a $25 million subsidy (corporate income tax credit, rebate or reduction) in 2010.

Sadly (for journalism), the article mentions nothing about the millions in subsidies given to Harley-Davidson.

Saturday, October 3, 2015

Wisconsin's Corporate Welfare

In keeping with the theme of corporate giveaways (see the previous post), there has been a lot in the Wisconsin media lately regarding company lay offs, closings and downsizings.

Jobs Lacking After State Subsidy Of Kohl's
Joy Global To Temporarily Close Milwaukee Department, Lay Off 113 Workers
Caterpillar Plans To Cut Thousands Of Jobs As Key Markets Slow

Perplexingly, Wisconsin has also been lavishing welfare on some of these same companies as they lay off employees or fail to create the promised jobs.

Caterpillar (and former Bucyrus) has received $40 million in state and local awards (subsidies) in Wisconsin.

Kohl's has received at least $87.5 million in subsidies from Wisconsin.

Mercury Marine received $123 million. Northwestern Mutual Life $50 million. Quad Graphics $46 million. Oshkosh Corporation $36 million. Uline $18.6 million.

According to a New York Times analysis, Wisconsin spends $1.53 billion per year on subsidies.

As Badger Democracy wrote:
In total corporate incentives, Wisconsin ranks 14th overall in the nation...Of the 903 reported corporate grants listed in the Times report, 300 (nearly one-third) have come in 2011-2012 alone, during the Walker administration, primarily through the WEDC “Enterprise Zone Jobs Tax Credit.” In fact, seven of the top ten grant awards totaling over $270 million are 2011 or 2012 grants.
But we're broke, remember?

For More Information:
Discover Where Corporations are Getting Taxpayer Assistance Across the United States

About Meijer Grocery Coming To Wisconsin...

Think you'll be saving money by shopping at Meijer? Think again.

Here we have yet another large corporation using their boardroom of lawyers to lower their property taxes...which means you'll be paying more.

In a long-building tax avoidance scheme, big businesses and their lawyers, with the help of malleable appraisers and tax representatives, are turning the appraisal profession on its head.

Some basic economic principles are imbued in property appraisal. Substitution is the idea that a comparable must not only be similar physically, but also economically (similar rents, expenses, etc.).

Typically the details and length of the lease are common factors a buyer would consider when contemplating the purchase of an income-producing property. The appraisal profession typically considers the rents a property can charge an outcome of the location - the land. Now, according to the lawyers, the value is due to goodwill and other intangibles...and, conveniently, most of these aren't taxable.

Take Walgreens, a court recently ruled that sales of Walgreens weren't good comparables or good indicators of value for ... Walgreens. Typical retail, a closed Blockbuster store, and mom-and-pop stores were deemed more comparable.

The City of Milwaukee recently settled a property tax dispute, dating back to 2010, with Walgreens, on 18 of their stores. The settlement was for $3.7 million dollars.

Opinions in the Milwaukee Journal Sentinel on the topic (incorrect grammar and all) were things like: "Is it any wonder why citizens and businesses want to get out of the City?" or "This should be good news for mayor Berrett now he has another excuse for not fixing the pot holes on almost every street in the city. Waite for him to try increasing the wheel tax again. Which reminds me is he spending any of the wheel tax money on streets."

So, giving a business a refund of $3.7 million is a reason for a business to go away? Not to mention, the $3.7 million Walgreens is not paying, now has to be paid by other citizens. When corporations avoid paying their fair share, everyone else has to pick up the slack.

Much of what this case hinges on is that fact that Walgreens claim the leases they have are not market rate and actual sales of other Walgreens are also not comparable market transactions.

On the transfer returns (which names the buyer and seller; and separates real estate, equipment and business value) for the Walgreens sales, the Property owners claimed the total sale prices were for the real estate. Plus, in their actual leases on these properties, they specifically state these are real leases and not financing instruments. [Transfer returns and court transcripts, which contain this, are public information.]

Yet, in court they have claimed just the opposite. And the judge agreed in a City of Madison v. Walgreens court case. Although, if we're going to accept these revelations as true, this means that Walgreens has submitted falsified transfer returns and entered into bogus contractual leases.

Much of how a property's value is declared is based on accounting - wherever they can shift the supposed value to lower their taxes the most (based on things like depreciation, etc.), that's where they'll enter it in the ledger. A Walgreens is built to be a Walgreens, nothing else. Just as other special purpose properties (like gas stations, car washes, etc.) are built for a specific use. The builder/owner does this because they expect a certain return on their investment at that specific site.

Walgreens feels more appropriate comparable properties, to establish the value of their properties, are vacant buildings and and other neighborhood establishments.

This is like saying to find out what my Chevy Camaro is worth I should look at what Ford Taurus' are selling for. They're both cars, right?

The court completely ignores the concept of substitution. A property is only comparable if a buyer would actually consider it as an alternative investment. A vacant store does not have the same marketability and value as a store with a 25-year lease.

If a current owner of a Walgreens store were to sell, he/she would base the sales price on what the income stream is worth - how much he/she gets from the leases. Which is why most Walgreens sell at twice what Walgreens are claiming they are worth in court.

This whole fiasco ignores the general market that is the triple-net lease, investment grade properties. These are properties under long-term leases (usually 25 years) where the tenants pay the expenses. Thus vacancy (a typical deduction from the cash flow) is non-existent for the property owner. And, expenses are minimal to non-existent since they are the responsibility of the tenant. For these reasons, the standard Walgreens drug store sells for $467 per square foot at a 5.6% capitalization rate. The minimum typical footprint of a Walgreens is 12,000 square feet; this equates to a $5,604,000 value (or a rental rate of roughly $26 per square foot).

Even though the market evidence indicates this is what typical investors buy and sell these properties for, Walgreens astonishingly claims the stores are only worth half that.

All of these factors corroborated the City's assessments on the Walgreens' properties. Yet, for some inexplicable reason, the judge bought Walgreens' self-interested and contradictory argument and decided rather than comparing apples to apples, one should compare apples and rotten apples. And, because of this, my fellow taxpayers, you will pay more since Walgreens is paying less.

And taxpayers should be upset over this (and start complaining to their city attorney office to fight back against this shakedown) because the ambulance-chasing lawyers tax representatives are trying to use these same arguments all over the country on restaurants, big box stores and a whole host of other properties. Which means, in the next few years, residential home owners will be paying a lot more, while commercial property owners will laughing all the way to the bank.

And, for big boxes (like Meijer, Target, Walmart, Lowes), some courts have decided the best comparable indicators of value are vacant, or "dark", stores. Somehow, a building that is closed and out of business is a viable alternative investment to an successfully operating one.

Olivia LaVecchia has more of the gruesome details:
Figuring out the value of a property can be a complicated business. In Michigan, town and county assessors typically use a property’s construction costs, minus depreciation, as a primary metric to determine its fair market value; taxable value is half that amount. Property owners sometimes prefer, instead, to use the sale prices of comparable properties. This was the approach that Lowe’s took—with a catch. Lowe’s looked at the definition of the word “comparable,” and decided to stretch it. It said that, because big-box stores are designed to be functionally obsolescent, comparable stores are those that have been closed and are sitting empty—the “dark stores” behind this method’s name... 
It’s an established part of the big-box retail model that the boxes themselves be custom-built, cheaply constructed, and disposable. If retailers decide that they need a bigger space, it’s cheaper for them to leave the old one behind and build a new one. When Walmart, for instance, opened its wave of new, twice-the-size Supercenters across the country in 2007, it left hundreds of vacant stores behind it. This means that new, successful stores like the Marquette Lowe’s are rarely the locations that are up for sale, and that when big-box stores do come on the market, it’s because they’ve already failed or been abandoned by the retailer that built them. In other words, Lowe’s was saying, it had built a property that, despite generating roughly $30 million in annual sales for the company, had very little value, and because of that, it should get a break in its property taxes... 
Despite all of this, cities and towns continue to buy into the myth, sold to them by the mega-retailers themselves, that big-box stores spark economic development. In service of this myth, local and state governments across the country have granted at least $2.6 billion in subsidies to just six large retailers, including $160 million to Walmart and $138 million to Lowe’s, according to another study from Good Jobs First.
When these businesses use their clout to avoid taxation, all other taxpayers pay more.

For Further Reading:
For Cities, Big Box Stores Are Becoming Even More Of A Terrible Deal
Multibillion dollar Meijer, Inc. finds another way to screw Michigan cities and kids
Unfair Comparisons? Meijer, other big-box retailers use ‘dark store’ loophole to cut their Michigan property tax bills
Big box stores ringing up property tax discounts
Are big-box retailers getting a tax break at schools’ expense?