Tuesday, January 8, 2013

Caterpillar CEO: HB1673 is Right! (to work).


“We have a whole department.  We try to take advantage of every single deduction we can possibly find, which is in, my mind, an American way to do it…We do nothing illegal…I’m proud of our tax department” – CEO Doug Oberhelman of Caterpillar   (www.chicagotribune.com/business/ct-biz-0316-confidential-oberhelman-web-vrsion-20120316,0,6458064.column).

Dodger (…or...the “Artful” Caterpillar).

Noun: (see also: bilker, cheater, chiseler, scamster, defrauder, trickster, etc.) One who dodges or uses tricky devices.  Also, “’one who engages in cunning tricks or dishonest practices to avoid something unpleasant: ‘tax dodgers’” (Google definition).

Waiting with baited breath and in excited anticipation of the Democrats (of all groups!) in Illinois to do what it has taken Republicans to accomplish in other states, Caterpillar CEO Doug Oberhelman is openly announcing his endorsement of the Nekrtitz/Biss assault on public sector workers as culprits for the state of Illinois’ debt burden – actually a result of holding to corporate preferred flat tax revenues, providing for corporate tax loopholes and giveaways, and ignoring multiple opportunities used by other states to match changes in the economic realities of a modern world.  Always remember, when  someone like Caterpillar’s CEO Oberhelman says a bill like HB1673 “would be better for the state’s long-term fiscal health,” he’s not talking about the people.  In his mind, corporations and states and Doug are people, my friends.  Not you, not me, not us collectively.

Remember last post, North Carolina held its breath and awaited the call from Caterpillar; alas, it was not to be.  Instead, Caterpillar chose another rival: Georgia, despite North Carolina’s promise to provide $70 – 90 million in perks and tax credits. 

The people of Athens, Georgia, couldn’t be happier.  Like those workers in Muncie, Indiana (see last week), they also look forward in a right-to-work state to help produce the mini excavators and small tractors.  Caterpillar seeks to use the cheapest labor available to export to emergent economic markets, and Georgia fits the bill.  Right-to-work states have received lots of press lately, especially from presidential candidate Newt Gingrich, who regards them as a large and suitable weapon in the attempt to improve his vision of the economy.  According to the National Right To Work Foundation, the organization was founded in 1968 to “eliminate coercive union power and compulsory unionism abuses through strategic litigation, etc.” (www.nrtw.org/en/about)  

In fact, although the true correlative reasons may be quite skewed, the greater number of companies that have moved their operations to RTW states in the last few years supports Gingrich’s vision.  We in the middle class can all sleep less easily with this in mind.  Of course, Newt would have our kids working as janitors too, but I digress… 

But seeking cheaper labor and little if any workman’s compensation on the national level is only one way of cutting pesky labor costs. Caterpillar’s strategic plan is after all much greater than just a city, state, or country.   In fact, Caterpillar has a much larger vision and interest in the world’s economy.  


In the global market, Caterpillar promotes schemes and strategies that, while legal, certainly leave one to wonder about ethos.  According to a suit filed by one of their own global tax strategy managers, Caterpillar, the world’s largest construction-equipment maker, sold and shipped thousands of parts from an Illinois warehouse while improperly attributing at least $6.5 billion of profits from those sales to a specious unit in Geneva (Green, Peter S.  Caterpillar accused of demoting executive discovering $2 billion tax dodge.  Bloomberg.  8 July 2011.).  It was called the “Swiss Strategy.”

But this is only one smaller aspect of a greater profitable paradigm planned by Caterpillar, as it moves to affect political decisions on the international level.  “Peoria-based caterpillar, which reported year over year earnings growth exceeding 250 percent in each of the last two quarters, is among several U.S. multinationals asking Congress to end U.S corporate income taxes on profits earned abroad.  The company had $3.7 billion of pre-tax income last year on $42.6 billion in revenue, 68% of which came from offshore” (Green, Peter S.) 

Unabashed, the CEO, Doug Oberhelman has declared the company must now promote lobbying on the global arena to assure such breaks in the present and the future: “We have to have a voice in writing regulations that are fair to all sides…I feel an obligation to all of our constituencies, when things aren’t going the way we think they should probably be going, to speak up.  That applies in Illinois or China” (Harris, Melissa.  www.chicagotribune.com/business/ct-biz-0316-confidential-oberhelman-web-vrsion-20120316,0,6458064.column ).

By using their “Swiss strategy,” Bloomberg asserts that Caterpillar is able to reduce its tax responsibilities to the U.S. nearly 10%, from 26 percent of about $27 billion from 2000-09 instead of the rate of 35%.  But according to the corporate whistleblower in Caterpillar, the company’s Geneva Switzerland subsidiary had no employees dealing in spare parts nor did anyone do any work in selling or shipping spare parts.  In fact, the spare parts were actually in a warehouse in Morton, Illinois, and all parts were shipped worldwide (despite Caterpillar’s assertions) by the employees in Morton.  Also, according to Bloomberg, the warehouse’s spare parts business was the company’s most profitable line (Green, Peter S). 

Not to be thwarted, Caterpillar also designed and enacted a new and improved Bermuda strategy, “aimed at returning some cash to the U.S. without paying any taxes on it,” according to documents secured in the investigation of the whistle blower. 

Important:  Congress is currently considering a one-time tax holiday that would reduce the rates of foreign income for multinationals like Caterpillar and others brought into the U.S. from 35% to 5.25%.  

When queried about recent discoveries and the emphasis in congressional lobbying, Caterpillar spokesman Jim Dugan said the company “has engaged in no wrongdoing…Dugan declined to comment on the suit’s allegations, saying Caterpillar ‘complies with all applicable tax laws and regulations’” (Green Peter S.).

Nice dodge.

Don't let characters like Oberhelman continue the evaporation of middle-class ideals.  Call 888-412-6750.  Say NO to HB1673!

 

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