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Legal tax evasion PDF Print E-mail
Written by Ozaukee Press   
Wednesday, 03 February 2016 18:29

Dodging U.S. taxes was the purpose of Johnson Controls selling itself to a company with a mailing address in Ireland

Wisconsin officials may be exchanging high-fives over a dodged bullet in the sale of Johnson Controls last week, but U.S. taxpayers have nothing to celebrate. The company’s 3,400 jobs will stay in the Milwaukee area, but $150 million per year in tax revenue needed to help fund American government services will disappear.

Avoiding payment of those taxes was the purpose of the maneuver by Johnson Controls to sell itself to a much smaller company that has a mailing address in Mahon, Cork, Ireland.

The buyer, Tyco International, will change its name to Johnson Controls. The combined company will have an office in Ireland. Though it will essentially remain a U.S. company, registered on the U.S. Stock Exchange, enjoying the protection of American laws and access to American government contracts, its tax payments will go to the government of Ireland.

This form of legal corporate tax evasion is not new, but Johnson Controls’ use of it may be the most disgusting example as a case of glaring ingratitude if not betrayal.

The company, a major supplier of automobile batteries, was one of the beneficiaries of the $80 billion American taxpayers paid to bail out the auto industry in 2008. Had General Motors and Chrysler been allowed to fail, Johnson Controls may well have gone down with them. The company’s CEO appeared before Congress to beseech lawmakers to approve the bailout.

In 2010, the company received a $299 million federal grant for the production of hybrid batteries. It has also raked in $149 million in tax breaks from the state of Michigan.

Apologists for exploiting the business nationality loophole in the tax code say such behavior is forced on companies because of the high U.S. corporate tax rate of 35%. A case can be made that 35% is too high, but the reality is that the tax rate is subject to reduction in so many ways that no business with an accountant who can correctly add two plus two without a calculator actually pays it. Johnson Controls paid a rate of 19% in its last fiscal year, substantially less than the rate paid by most individual taxpayers.

The business tax code needs to be cleaned up. Closing loopholes such as the ploy used by Johnson Controls would justify adjusting rates to put the U.S. more in line with other industrial countries. That’s a job for Congress. Unfortunately, while there is plenty of complaining about business taxes going on there, no progress in corporate tax reform is evident.

Spokesmen for Johnson Controls describe the Ireland dodge as a responsible move by its board of directors on behalf of stockholders. Share owners will benefit from the tax savings, but that is hardly a rationale to paint the sale to Tyco as ethical business conduct. The U.S. does much to create an environment in which business can prosper, which is one reason it has the world’s largest economy. Paying taxes to support its government should be seen as a duty not to be shirked by companies that profit in that environment.

Johnson Controls and Tyco, which makes fire protection products, would seem an odd couple, but they have one thing in common—tax dodging. Tyco is an old hand at avoiding taxes, having moved from the U.S. to Bermuda, then to Switzerland, before setting up in Ireland.

As for that dodged bullet, it’s a relief that Johnson Controls is not moving its Wisconsin jobs along with its for-tax-purposes headquarters. But caution for the future is indicated: Loyalty is obviously not this company’s strong suit.

Good water, bad water PDF Print E-mail
Written by Ozaukee Press   
Wednesday, 27 January 2016 16:05

Northern Ozaukee schools’ water-filling stations highlight the importance of a pure water supply and the folly of bottled water

Readers craving news of the positive variety must have been delighted by the story and photograph on the Fredonia community news page in last week’s Ozaukee Press.

The story told of how drinking fountains in Northern Ozaukee School District schools have been modified to fill reusable water bottles. The photo showed seven grade-school students with big smiles lining up to fill blue drinking-water containers printed in gold letters with the words “Ozaukee Warriors.”

The good news starts with the fact that there was no doubt that the water going into the kids’ bottles was safe to drink. Residents of the well-managed municipalities of Ozaukee County expect that, but the Michigan water disaster playing out now is a powerful reminder that a limitless supply of properly treated potable water is perhaps the most fundamentally important service government can provide.

Residents of the city of Flint, like almost all Americans, took for granted that water from the faucets of their homes was safe to drink, but they were betrayed by the state officials who took control of the bankrupt city. In what has the markings of criminal negligence and has stirred national outrage, state managers decided to cut costs by taking water from a polluted river for the municipal water supply. They ignored anguished complaints from residents that the water was unfit for drinking or washing. In fact, the water was so corrupt that it released lead from pipes, which was ingested by residents and now threatens lifelong impairment to many of them, including hundreds of children. 

The water the Northern Ozaukee school children, and all the residents of the Village of Fredonia, drink is pumped from two wells, 360 and 457 feet deep, and is treated by the Fredonia Water Works to meet every standard set by the U.S. Safe Drinking Water Act. In a typical year, the 64 million gallons of water provided by the system is subject to more than 1,000 tests.

That careful oversight is par for all the water utilities in this area. While the Flint scandal is a failure of government—exacerbated by the shrink-government-services agenda of Michigan’s governor—the good water provided by Ozaukee cities and villages is a government success and worth every penny of the price paid for it by residents, which is essentially a tax.

More good news in Northern Ozaukee’s water story is that the reusable water bottle program is teaching an important lesson and in a tiny but symbolically significant way is fighting a threat to the environment. Single-serve bottled water is the fastest growing beverage in the U.S., with roughly 43 billion bottles being purchased every year. The plastic of discarded water bottles is clogging not just landfills, but waterways, lakes and oceans, with dreadful effects on ecosystems.

Plastic used for water bottles is said to take more than 1,000 years to biodegrade. Some varieties cannot be recycled. According to one estimate, 80% of water bottles end up as litter. If the plastic is burned, it produces toxic fumes.

The indictment of bottled water goes beyond litter: Producing those billions of bottles uses millions of barrels of oil whose consumption contributes to the greenhouse gases heating the atmosphere. Transporting the water bottles to market adds to the soaring bill for environmental damage. For good measure, making water bottles wastes water—it takes about three quarts of water to package one quart of water. Suffice it to say, there are many reasons not to drink bottled water when safe tap water is available.

But back to the good news: The water filling stations in Northern Ozaukee schools are credits to the generosity and environmental awareness of the district’s high school students and parents. They were paid for by donations from the Class of 2015 and the Parent Teacher Resource group. Now parents are buying the Ozaukee Warrior water bottles for their children at $20 each to support the filling stations.

So let’s sum up: Flint water—bad news. Bottled water—bad news. Northern Ozaukee schools water—good news.

On the road to guns in schools PDF Print E-mail
Written by Ozaukee Press   
Wednesday, 20 January 2016 17:54

Is it too much to ask that weapons-permit holders obey Wisconsin’s sensible law banning guns in the hands of civilians from school grounds and buildings?

Changing gun-free zones, including schools, to guns-welcome zones is a priority of the National Rifle Association and the political action committees that support it, so it comes as no surprise that a bill has been introduced in the NRA-friendly Wisconsin Legislature that would allow guns on school grounds.

What does come as a bit of surprise is the creative rationale for the proposed law change. The sponsors, Rep. Rob Brooks (R-Saukville) and Sen. Mary Lazich (R-New Berlin), say it’s needed to keep people with permits to carry concealed guns out of jail.

Under current law, weapons permit holders could be liable for arrest for a felony if they have a gun in their vehicle when they take their children to school. Said Brooks, “When they drop off their kids, pick up their kids, I don’t think they realize they’re breaking the law.”

Ignorance of the law doesn’t usually cut it as a defense. See how far it gets you to tell the police officer who pulls you over for speeding that you didn’t know the limit was 15 mph in a school zone. 

The Brooks-Lazich bill would amount to a signed excuse for ignorance of the current law or for negligence in the failure of some gun-permit holders to remember they’re carrying, say, a Smith &Wesson .40-caliber semi-automatic pistol with a 15-bullet magazine under the seat of their car when they drive onto school grounds.

Wisconsin’s concealed-carry law asks very little for the privilege of carrying a gun besides passing a rudimentary training course and having a felony-free criminal record. Is it too much to ask that holders of such permits obey Wisconsin’s sensible law banning guns in the hands of civilians from school grounds and buildings?

It seems it should take more than a wish to accommodate the convenience of gun permit holders to justify writing a law, and it turns out there is more to this one. The Milwaukee Journal Sentinel reported that “Brooks said he was offering the bill because he would feel terrible if there were a school shooting and parents and teachers told him afterward they didn’t have a chance to defend themselves because of state law.”

The comment suggests that the legislation is also intended to help achieve the gun lobby’s goal of getting guns inside of schools, which is borne out by a provision in the bill that would let school boards decide whether guns can be carried in classrooms, gyms and other areas inside of school buildings.

The notion that putting more guns in more places makes Americans safer is animated by the Rambo-dream scenario of an armed citizen stopping a San Bernadino type of assault-rifle massacre by dispatching the shooters as they do their evil work.

The more likely scenario involving civilians engaging in gun battles with criminals is shooting bystanders and adding to the loss of innocent lives.

New York Police Commissioner Bill Bratton, one of the many respected law enforcement officials who are saying that America’s gun problem is too many guns rather than, as the NRA preaches, too few, pointed out recently that even police officers trained as marksmen have trouble consistently hitting targets with handguns. The idea that a graduate of one of Wisconsin’s cursory concealed-carry classes is qualified to shoot in defense of children and teachers in schools cannot be taken seriously.

Of all places, schools should be safe havens  from guns and the tragedy they can wreak, intended or accidental. That’s why so many local governments and states, with strong support from the public and educators, have declared schools gun-free places.

Following the NRA playbook, a bill to end gun-free status for Michigan schools has been introduced in that state’s legislature. A survey by one the nation’s most respected polling organizations found that 70% of the people of Michigan oppose allowing guns in schools. There is no reason to believe public opinion in Wisconsin would be any different.

Nothing good for Wisconsin can come from the Brooks-Lazich guns-at-school bill. It should be withdrawn from this legislative session, which would give Brooks time to consider whether getting guns into schools is really an achievement he wants on the record of his first term in the legislature representing Ozaukee County.

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