Sprawled Out: The Search for Community in the American Suburb

Ernst & Young: Corporate share of state and local taxes in Wisconsin is among the 10 LOWEST in the country

The "Tax Hell" demagogues of the right wing - - taxation is the only issue they can get both hands on without bloodying them - - like to give their corporate campaign contributors a big juicy PASS on paying their fair share of taxes, which means a bigger bill lands in the laps of individuals.

Good corporate citizens like Harley-Davidson, Sentry Insurance and others pay their fair share every year. "Taxes for us are not bad," Northwestern Mutual Life CEO Ed Zore told the Journal Sentinel in February.

But - how long will "good corporate citizens" continue to be tax-paying suckers if their competition is successfully and stealthily avoiding even a penny in their fair share?

Answer: Not very long. And the difference will be made up right out of your pocket.

From the Milwaukee Journal Sentinel:

Bill on tax disclosure is worthy

By KAREN ROYSTER

Posted: Jan. 3, 2008

Wisconsin is transforming its economy to attract biotech investors, 21st-century service entrepreneurs and talented young people looking for a community that supports economic growth and a quality lifestyle for families. Good education, safe streets, strong transportation, flourishing parks, recreation and culture as well as a broad network of effective community services attract investment and immigration.

These systems can be effective only if there is adequate public revenue for ongoing development and maintenance. However, in the past 10 years, our state and local communities have faced annual budget shortfalls even as property taxes increase.

Research over the past two years has unearthed some discouraging facts. Corporations avoided $643 million in Wisconsin income taxes in 2006, according to a recent study in the tax journal State Tax Notes. Accounting giant Ernst & Young calculated that the corporate share of state and local taxes in Wisconsin is among the 10 lowest in the country.

Clearly, a basic examination of who is paying what taxes is an obvious step to take. All people and businesses have a right to know if every entity using public services is paying a fair share of the cost.

In December, the Institute for Wisconsin's Future reported that Microsoft, the computer behemoth that made $12 billion in profits in 2005, didn't pay a penny of Wisconsin corporate income tax. Nor did Merck, the pharmaceutical giant with $5 billion in 2005 profits. And Sears, whose retail family includes Kmart and Lands' End, made $1 billion in 2005 profits without paying any Wisconsin income tax.

All three mega corporations, however, use substantial amounts of money for accountants and lawyers to find loopholes that allow them a free ride on public services paid for by families and local businesses.

Good corporate citizens like Harley-Davidson, Sentry Insurance and others pay their fair share every year. "Taxes for us are not bad," Northwestern Mutual Life CEO Ed Zore told the Journal Sentinel in February.

But there is no level playing field among business groups. No one knows for sure who is paying and who is not. The public and the Legislature are in the dark about corporate taxes.

Sen. Dave Hansen (D-Green Bay) has proposed legislation to address this problem: the Wisconsin Corporate Tax Accountability Act (SB 367). The bill would require major corporations with publicly traded stock to disclose the facts about their profits and tax contributions to Wisconsin.

More than 99% of all Wisconsin businesses are not affected.

If the bill becomes law, Microsoft, Merck and Sears will have to report their revenue and tax payments. Will they boycott Wisconsin? Will they stop selling us their software, their drugs, their tools and appliances and clothes? No.

Wal-Mart has bragged that it uses a real estate gimmick in 82 of its 89 Wisconsin stores in order to slash its state taxes. Wal-Mart pays rent to itself for the stores, using various corporate subsidiaries to do so in a way that virtually eliminates its Wisconsin profits. Will Wal-Mart shut down here if the state makes its tax avoidance public information?

Hansen's bill is asking for facts - honest disclosure about which big corporations are paying their share and which are not. This disclosure would give taxpayers and legislators information that's desperately needed in order to have intelligent and informed debate about tax reform.

Karen Royster is executive director of the Institute for Wisconsin's Future.

A quasi-Ph.D who is unclear on the concept of "profit," or, "Bow and give alms to our benevolent corporate overlords!"

Barbara Fischer, a Milwaukee Journal Sentinel "community columnist," has become a personal favorite of mine for her can't-believe-it's-not-a-parody, Ayn Rand-ian, compassion-free world view (see previous related blog entry here).

Her latest, pasted below, is another jewel. 

Ms. Fischer says in her bio "I am chair of a business and economics department at a private liberal arts university in the metropolitan area. I have been a professor for 15 years." As for the cryptic alphabet soup appended to her name,  Jim Bouman at Waterlogged in Waukesha enlightens us:

Ph.D. A.B.D., for the untutored, describes an utterly laughable reification. Someone who lists "Ph.D., A.B.D." as a credential will try to persuade you to buy a "Semi-boneless Ham" or a pint of "Fat-Free Half and Half".

A.B.D., it turns out, means "all but dissertation." Or, in other words, NOT a Ph.D. To read her interaction with her "class," by the way, leads one to think she's teaching elementary school rather than a college level course.

Something has to be behind her fairly breathtaking error regarding what "profit" is. She begins:

Being a conservative economics teacher at a liberal arts college is not easy. Oftentimes when I am teaching market structures (bear with me here), the inevitable comments and questions arise: Why are businesses so greedy? Why do businesses earn excessive profits? We should boycott Wal-Mart. The oil companies are gouging us.

I decide to use this as a "teaching moment."

The lesson begins this way:

"Let's take a few minutes to answer some questions. Who pays for your tuition?"

Several hands go up. One student retorts, "I pay my own way." I ask how. "From my own paycheck, of course." I ask, "Who pays your paycheck?" The student responds, "The company."

"And how does the company have the means with which to pay you?" The student replies, "I guess from their profits." I respond, "That is correct."

Not correct - and may make for some interesting tax audits (Pundit Nation spotted the goof as well). Profit is what you have after  subtracting costs of doing business - - and, as much as free market warriors would like to forget them, paying the employees has to be considered a cost of doing business, not something you do if you get into the black.

I see the error as revelatory. The days when employees were treated as partners in the quest for profit are fading from memory, and Barbara Fischer's "teaching moment" unwittingly - though starkly - illuminates the ideological underpinnings to that slide. Being a self-described conservative academic has evidently sheltered her from reality to the extent that she exposes a bit of wishful thinking: "We (the saintly 'Corporation') make money, and we'll pay the work force whatever dribbles over the edge. IF something dribbles over the edge."

Ms. Fisher's Mentos commercial (I picture these fine young academicians exchanging high-fives as they get hip to "Fischernomics") is comically myopic and ends with a bang:

"The next time you hear about the evil oil companies, the evil Wal-Marts or any other evil company, remember that without them, you would not be at this institution, I would not be here, your other professors would not be here and the new building would not be built."

No, folks, this isn't satire. The column, and the delicious quote above, are authentic. I guess her point is, let these benevolent Corporate gods do what they will, because we suckle at their teat and they have made us what we are.

Wrong again.

She's apparently never heard of the GI Bill, a government program which made college affordable for an entire new population segment (i.e. non-wealthy) and their children.  And she seems to ignore the fact that the this new high-level workforce helped create the postwar US economic juggernaut. Corporations have responded - - only after government initiative showed them the way - - by seeding the academic ground for more talent by contributing to institutions of learning.

And how about a world where corporate whims are unfettered by government regulations? Let's go back to 70 hour work weeks and sweatshops packed with nine- and ten-year old kids - -  that's what worked for corporations before they were reined in.

Ladies and gentlemen, from the author of "Misgivings about taking action for the 'common good" and "What's so wrong with being selfish?" here's an ode to letting our Corporate betters do what they will  - - unencumbered by silly regulations or the need to pay taxes - - so they can continue their selfless good works:

Don't slap the hand that feeds you

By BARBARA FISCHER

Being a conservative economics teacher at a liberal arts college is not easy. Oftentimes when I am teaching market structures (bear with me here), the inevitable comments and questions arise: Why are businesses so greedy? Why do businesses earn excessive profits? We should boycott Wal-Mart. The oil companies are gouging us.

I decide to use this as a "teaching moment."

The lesson begins this way:

"Let's take a few minutes to answer some questions. Who pays for your tuition?"

Several hands go up. One student retorts, "I pay my own way." I ask how. "From my own paycheck, of course." I ask, "Who pays your paycheck?" The student responds, "The company."

"And how does the company have the means with which to pay you?" The student replies, "I guess from their profits." I respond, "That is correct."

The next student says, "I get a scholarship from the university." I say, "All right, and where does the university obtain scholarship funds?" "From our tuition?"

"Not really," I say. "It comes from donations and other similar means. Who provides these donations? Individuals and companies. And where do you suppose these individuals and/or firms get those funds?" From profits is the answer - again.

Another student replies, "I receive government grants and/or loans."

"And where do you suppose these funds originate?" I jump the gun and reply, "From taxes. Who do you suppose pays all the taxes? We do - from our paychecks from companies who create the jobs from profit. And let's not forget, companies pay taxes as well - from their profits."

Yet another student replies, "My parents are footing the bill." Before, I can say anything, some will say, "We know, from their jobs created by companies from their profits."

"Yes, but now let's move on to something a little closer to us right here. Where do you suppose the university received funds for the brand new building that was built? And the answer is not tuition. From individuals who donated the funds. And, in turn, where did these individuals obtain their funds? From either having a job or creating a company and donating money from their profits."

At about this time, a student will mention that not all individuals work at for-profit organizations. "Excellent point," I retort. "Let's discuss that next."

"Where do most not-for-profit organizations obtain their funds? From donations, which come from individuals who have a job created by business from their profits! Or perhaps from government funds, which come from taxes, which are paid by individuals from their salary created by profits. Or from selling services paid for by individuals who have jobs.

"What about people who work for government?" As I open my mouth, a student will say, "From our taxes, which come from people with a job created from profits."

I ask one last question. "Who do you think pays my salary?" That is an easy one as they say in unison, "We do! From our tuition that comes from our jobs, our parents, government, etc."

By now, they get the drill.

So I tell them, "The next time you hear about the evil oil companies, the evil Wal-Marts or any other evil company, remember that without them, you would not be at this institution, I would not be here, your other professors would not be here and the new building would not be built."

Companies are the economic engine that drives the economy of the United States of America.

I rest my case.

Barbara Fischer of Port Washington chairs the business and economics department at a local private university. Her e-mail address is bfischer4@wi.rr.com

Local columnist's latest love letter to Wal-Mart

Image above from Wal-Mart: The High Cost of Low Price

Always entertaining are Journal Sentinel columnist Patrick McIlheran's periodic love letters to Wal-Mart.

Wal-Mart gets slammed here regularly, but that's not to say that Walton's Warriors aren't getting the message and cleaning up their act to some extent. So, in his latest piece of Wal-Mart P.R., does McIlheran pat them on the back for recently upgrading health insurance programs for its employees? Tout recent environmental measures the company has adopted?

No and no, because that would be admitting that Wal-Mart was grossly deficient in those areas in the first place - - and the conservative Hive Mind takes its cue from Bush/Cheney in never admitting errors.

Rather, he pulls out the tired playbook and deploys his old favorite rhetorical tools: oppose Wal-Mart and you're a "snob"; since low prices and poor quality are "popular" with the discerning masses, Wal-Mart is heroic in meeting that need; well-liked Aldi must be something like maligned Wal-Mart because both feature low prices (that's particularly brilliant); the "made-in-China" straw man is deployed (well, other stores sell products made in China...);  you're just "bossy," darn it!; and, "if you don't like it, don't shop there."

Yeah. That'll show 'em.

In McIlheran's world, evidently, there are simply no community impacts resultant from dropping a giant, fairly unkempt big-box into the middle of a suburb - - one that might be attempting to construct a certain manner of community that rises above garage-to-parking-lot purgatory. (McIlheran: "adorable little commuter-rail 'burb." Sense him snarling?) 

Never mind Wal-Mart's habit of abandoning stores and leaving them to rot. Or, for that matter, their massive tax avoidance,  indifference to local sensitivities, ability - and regular tendency - to strangle suppliers, wage and benefit policies (now finally being addressed to some extent after lots of "liberal whining") that flood state social services (pdf link), gun-to-the-head negotiations with befuddled and overmatched local municipalities, regular and clear violations of local zoning ordinances, etc.

Snobbish concerns, I guess.

For a perspective that arguably veers toward the "snobbish," McIlheran could read "How Not To Like Wal-Mart," which is written by a guy who seems to agree that Wal-Mart is not the big bad wolf, but nonetheless a powerful reinforcer of all that is sub-par and just-below-adequate - - reason enough to avoid their influence and motley presence in any community you care about. If all that worldwide economic/social impact nonsense doesn't do it for you.

McIlheran: "The hallmark of Wal-Mart isn't that it sells Chinese goods; it's that it's cheap."

Wrong. The hallmark of Wal-Mart is not simply that it is cheap; it's that Wal-Mart is a powerful beacon for the victory of enormously profitable banality at all costs. We mourn the loss of excellence and sense of pride in something beyond a company bottom line that rewards only those on the top rungs.

On a related note: The new Eagles' album is currently  stocked exclusively at Wal-Mart.

Cents and sensibility in retail
By Patrick McIlheran

Wal-Mart wants to put a big store in Cudahy. As it would fill a brownfield now broken only by the rusting hulk of a half-built ice skating center, you'd think people would be OK with this.

"I am not a fan of Wal-Mart," Mayor Ryan McCue said. Last winter, when running for mayor, he said Cudahy has an image problem and Wal-Mart would only make it worse.

Yeah? Rusting, abandoned projects don't do much for glamour, either. A Wal-Mart Supercenter - those are the ones with full-size grocery stores - would probably be a rung up the ladder. Of the seven such Supercenters within 40 miles of Milwaukee, every one is in a ZIP code with higher median household income than Cudahy - 38% higher, on average, in the 2000 census.

In the past, McCue's said Wal-Mart doesn't fit in with transforming Cudahy into a high-end, adorable little commuter-rail 'burb. If that's the vision, I don't see where my usual Cudahy shopping haunt, Aldi, fits in. The grocery chain has one of its small, stripped-down stores at Packard Plaza. I shop there a lot because it's cheap, selling house-brand staples and staffing so lean that the managers help clean the place. High end, it's not, but I like it.

But Aldi doesn't seem to arouse bad feelings while Wal-Mart does. A whole complex of retail snobbery and trade angst has arisen around it. "We do not need another outlet for cheap Chinese crap," said one man at a Cudahy meeting this month, neatly packaging the mess of rage.

So Cudahy needs, instead, costlier Chinese crap? The hallmark of Wal-Mart isn't that it sells Chinese goods; it's that it's cheap. The union-funded Economic Policy Institute, fount of anti-Wal-Mart data, can't say whether the chain has more Chinese goods than Target or Kmart. Robert Scott, EPI's point man on the issue, won't venture a guess, but he says his impression is that all discount retailers rely heavily on China.

For that matter, Kohl's imports from China. You just pay more. My wife's $79 iPod was made in China. I bought it at Mayfair Mall. Does that qualify as an outlet for cheap Chinese crap?

"The dividing up of the supply chain makes it harder to target particular countries for your personal boycotts," says Daniel Griswold, a trade scholar at the libertarian Cato Institute. People rail about Wal-Mart, though Griswold says that its niche - bargains - happens to align well with China's specialty, which is low-cost stuff from low-value labor. One of Cudahy's specialties is jet engine parts made by high-value labor in the big Ladish Corp. plant. Ladish sells about half its goods overseas, so you'd think neighbors would see a stake in trade.

Besides, Wal-Mart Supercenters are mainly about groceries. Groceries are mainly domestic. The Wal-Mart milk I bought at a Supercenter in Germantown came from the same Sheboygan plant as the Dean's I got elsewhere. The difference is price.

That's what this really is about: the prices of groceries and the cost of unionized grocery labor. Most traditional grocers are unionized. Wal-Mart, like most other retailers, isn't.

"You can date the union pushback on Wal-Mart to the time they entered the grocery business," says Griswold. One of the biggest anti-Wal-Mart campaigns is sponsored by the United Food and Commercial Workers.

Unions contend that Wal-Mart workers need one, as they're oppressed, though the chain pays wages and benefits on a par with other big discount retailers. If anything, the staff at the Germantown store Sunday seemed preternaturally friendly. The checkers at Aldi are even friendlier, and they're non-union. The chain makes a point of paying well so it can get by with a small, happy, flexible staff. So much for the value to the customer of unionized help.

That may be why the grocery unions aren't touting their merits to customers: The value proposition is hard to see. Instead, these defenders of the working class are in the odd position of making a snobbery attack on a chain that grew by saving working-class customers a fortune.

It is as topsy-turvy an argument as another one you hear, that consumers already have a perfectly sufficient number of choices and so do not need a Wal-Mart that will instantly lure them from those perfectly sufficient choices.

It's all cheap bossy crap, to repurpose a phrase. How about just letting people shop where they want? Wal-Mart appears to have a clue about what customers want. If you don't like it yourself, don't shop there. If you don't like the wages, don't work there.

If your neighbors feel otherwise, that's their business, not yours.

Patrick McIlheran is a Journal Sentinel editorial columnist. His e-mail address is  pmcilheran@journalsentinel.com

Wal-Mart loophole remains open in new Wisconsin state budget

RELATED UPDATE: On a secret ballot, Democrats who control the state Senate dumped Sen. Judy Robson (D-Beloit) as majority leader and replaced her with Sen. Russ Decker.

Something to consider as you look at your property tax bill. (Previously mentioned here.)

From the Milwaukee Journal Sentinel:

A proposal by Sen. Russ Decker (D-Schofield) would have ended a technique that Wal-Mart uses to lower its taxes.

The department has claimed that Wal-Mart owes more than $17.7 million in back taxes and penalties because it has been illegally deducting as an expense rent it pays to itself.

Wal-Mart has claimed that because of the way state and federal tax laws intersect, the technique is perfectly legal, and the matter is before the state Tax Appeals Commission.

Under Decker's proposal, which the Democratic Senate added to Doyle's budget, the technique would have been outlawed.

That would not have affected the commission case but would have stopped Wal-Mart and other businesses from using the technique in the future.

Recent tax stories show where politicians' true loyalty is

Looking at taxing nonprofits while Wal-Mart and their ilk continue to skate by free?

A recent Milwaukee Journal Sentinel letter to the editor hits the nail on the head:

Our political system is the problem

This letter is in response to the Sept. 1 editorial "Wal-Mart's loophole." I find it hypocritical that we have this dilemma with regard to paying taxes by one of the nation's largest companies and that it is being addressed by the Milwaukee Journal Sentinel. Why not report the real story of why we have this problem?

We as a nation have ignored the warning message from President Washington, when he left office more than 200 years ago, against the rise of political parties. He said they are self-serving and ignore the needs of the people.

The current practice in the United States is that wealthy corporations provide millions of dollars to Democratic and Republican candidates seeking political office or to remain in office. The elected politicians who receive that money are obligated to provide laws and privilege to those who provide it. They are not dedicated to the people of the United States but to the wealthy corporations that really benefit.

As long as we have this current corrupt political practice, we will witness games being played by lawyers and politicians regarding taxes paid by wealthy corporations. We are actually fulfilling what the Bible says: The love of money is the root of all evil and brings with it many sorrows.

Jonathan S. Johns
Oak Creek

See also:

Paul Soglin: "Your Wisconsin Tax Hell: Manufactured by WMC"

"Scamming the system" - More about corporate tax abuse

Property taxes: "Why am I paying so much?" PART 2

mid coast views: "Costco Takes the High Road to Grafton!"

Michael Rosen has an excellent blog called mid coast views that I discovered via James Rowen's Political Environment (that's how the web works!). Since Costco might be looking at Franklin for a new location, it should be noted that while the company is a big box, Costco is not an evil empire ala Wal-Mart. Read Rosen's insights here.

Excerpt:

... The Milwaukee Journal Sentinel reports: ”The employees seem more helpful at Costco.”

And why are Costco's employees more engaged? Perhaps because they average $17 an hour, while Wal-Marts’ average $10. And unlike Wal-mart’s employees, 92% of Costco employees can afford the company’s healthcare benefits.

Costco employees earn more because they have a union-the Teamsters that represents 13,800 of the company’s 127,000 employees. That’s only 17% of Costco’s total workforce. But union representation creates a ripple effect that helps set labor standards for all Costco employees.

Costco’ labor agreements lock in wage and benefits packages that are the highest in the grocery and discount retail industries. And Costco passes on similar compensation packages to its non-union workers.

Costco’s executive management recognizes that Wal-Mart/Sam's Club competes based on low prices and low wages-a low road corporate strategy. They recognize that in the labor market, like all markets, you get what you pay for. So Wal-Mart’s low wages attract less skilled and motivated employees. The result is low levels of service.

So while Costco’s prices are roughly equivalent, it competes on the basis of service and productivity. Costco attracts more skilled and dedicated employees by paying them fairly. The result is better service and higher productivity.

As Costco CEO Jim Senegal has said: “We pay much better than Wal-Mart. That’s not altruism. It’s good business.”

Link: mid coast views: Costco Takes the High Road to Grafton!.

Keeping downtown alive in the face of Wal-Mart

"Just one mile from the city's heart, ground has been broken for a Wal-Mart Supercenter...".

Rather than roll over and die, the small community of Jefferson, Wisconsin looks for ways to revitalize and energize its city center before the outward pull begins.

"There is going to be growth here," says Gary Myers, the city's mayor. "The demographics are too powerful. The question is: Are you going to manage it or let it happen in a random fashion? Our goal is to manage it, beautify and enhance what we have instead of letting the growth take over us."

This is definitely one to watch.

Seeking best of new, old worlds

Jefferson's big development plans center around rivers, downtown

By BILL GLAUBER
bglauber@journalsentinel.com

Posted: Sept. 2, 2007

Jefferson - From his perch behind the prescription counter at The Drug Store on Main St., pharmacist Bob Niebler has spent decades viewing the life and times of his hometown.

He watched as old industries such as Schweiger Furniture thrived then closed, saw local stores shut down. He endured the hard knocks of recent years as a bitter strike hit the local Tyson Foods plant and a fight over a new Wal-Mart store led to the recall of an alderman.

Niebler still has high hopes for Jefferson, hopes embodied by a proposed downtown and riverfront development plan that just might lure people back to city's center, not just to work and shop, but to live in homes, condos and apartments.

"It's time we open whatever potential we have," says Niebler, 59. "Every community in the state is trying to reinvent itself."

Jefferson's reinvention will be one to watch. It's not just about land and commerce, homes and apartments - it's about retaining a sense of place and community even as economic changes wash over the area.

The city with 7,787 residents sits along the Rock and Crawfish rivers, about midway between Milwaukee and Madison.

In many ways, it's a self-contained place, the Jefferson County seat, with courts, government offices and close-knit neighborhoods.

But it also looks outward, couples commuting to jobs in Milwaukee or Madison and newcomers lured by relatively inexpensive housing prices.

Change is inevitable.

A planned bypass along state Highway 26 will likely divert some truck and car traffic from downtown.

Just one mile from the city's heart, ground has been broken for a Wal-Mart Supercenter.

And St. Coletta of Wisconsin, which provides programs and services for adults with developmental and other disabilities, has a 174-acre parcel for sale on the city's eastern side.

"There is going to be growth here," says Gary Myers, the city's mayor. "The demographics are too powerful. The question is: Are you going to manage it or let it happen in a random fashion? Our goal is to manage it, beautify and enhance what we have instead of letting the growth take over us."

What's intriguing about Jefferson's development plan - which still must be approved by the City Council - is that it mirrors what is happening in larger cities across America, including Milwaukee.

The city is determined to open up its waterfront, to turn it into a residential and recreational front door instead of a back door of industry.

"We're trying to maintain this sense of small community, that quality of life that people cherish," Myers says. "We don't want to spoil that."

Several sites on or near Rock River are targeted for revitalization. Development plans include apartments for seniors, condos, townhouses, single-family homes, parking, an arts incubator and a riverwalk that would also embrace the Crawfish River. The city is hoping to lure developers to the sites. In all, there could be as many as 300 residential units built in the next few years - that's if the housing slump turns around.

At a recent public meeting, objections were raised by a few residents whose property would look on to the proposed riverwalk route. Some business owners grumbled about whether they will get help in fixing up their storefronts.

But there are already building blocks to kick-start Jefferson's future development as it tries to grow from the inside-out.

A swath of land just outside downtown now houses the county Highway Department site. Old buildings and piles of salt could be replaced with townhomes and duplexes looking right onto the Rock River.

Main St. has seen better days, but many of the façades are just waiting to be revitalized to bring the town back to its full 19th century splendor.

Niebler's drugstore, for instance, retains a Victorian look and a homey charm. Wal-Mart might be moving into the city, but Niebler is not surrendering.

"We're fighting the biggest (variety store) footprint one mile from this location," he says.

"I've lived change ever since I've been in business," adds Niebler, who started working at the pharmacy as a clerk in 1962. "I still believe the community needs the presence of a local community pharmacy, and I intend to fill that need."

Bill Brandel, 58, a former mayor who taught generations of Jefferson's children as a high school history teacher, is helping guide the project as a member of the Redevelopment Authority.

"We're going to see some amazing changes in our little town," Brandel says.

Brandel and others here have seen past redevelopment plans come and go. But this one, he says, is different. The vision is clearer, to return the city to its riverfront roots. And the aim is just a little bit higher, to revive Main St. and the downtown.

"If you're going to have a vital downtown, you have to have people living downtown, whether it's in Milwaukee or in Jefferson," he says. "This project moves people downtown."

Wal-Mart: "A company that has changed stores as casually as you and I change shoes."

According to Sprawlbusters, there are at any given point in time between 300 and 350 dead Wal-Mart discount stores littering the landscape. And they are in NO hurry to repurpose those ugly eyesores - - colossal structures often built  with city and state tax money in the form of "grants," deferments, and TIFs.

From the PBS special STORE WARS: WHEN WAL-MART COMES TO TOWN -

Empty Boxes

Wal-Mart stores are often the size of four or five football fields - huge in scale compared to many of the small communities that they neighbor. Criticized for deserting stores that under-perform, Wal-Mart has left behind more than 25 million square feet of unoccupied space across the country (May, 2000). The company claims it tries to sell these properties, but the only potential buyers are other big retailers, and Wal-Mart will not sell real estate to its competitors. In one Kentucky town, an empty Wal-Mart was torn down at the taxpayers' expense.

"They place their stores so close together that they become their own competition. Once everybody else is wiped out, then they're free to thin out their stores. Wal-Mart has 390 empty stores on the market today. This is a company that has changed stores as casually as you and I change shoes."

- Al Norman, Sprawl-Busters

Is it any wonder Saukville, Wisconsin needs to hold the retail giant's feet to the fire?

Amendment may affect plans for Wal-Mart

Saukville - If a Wal-Mart Supercenter is built in Saukville, the village might want assurances that Wal-Mart will find a way to reuse its existing store at 825 E. Green Bay Ave.

The Plan Commission will consider tonight whether to recommend amending a village ordinance governing buildings larger than 50,000 square feet. The amendment says that if a new building, such as a Supercenter, causes a current business to relocate within the village, the proposal "shall include a reuse plan for the structure being vacated as well as the proposed new building."

The amendment also would require the developer or the new building owner to pay for marketing the reuse plans.

Wal-Mart last week submitted initial site plans for a Supercenter on the east side of I-43 less than a mile north of Highway 33, said Brian Biernat, the community development director.

From The News & Observer of North Carolina:

Old Wal-Marts linger empty
Closings leave towns with 'a giant hole'

Eric Bishop, Staff Writer

HILLSBOROUGH - The massive building sits abandoned behind hundreds of empty parking spaces at the Hillsborough Commons shopping center.

Once bustling with shoppers, the former Wal-Mart just off South Churton Street has been quiet since the retail giant replaced it in 2003 with a Wal-Mart Supercenter three times its size a few miles up Interstate 85.

"The day they left, it was like a tomb over there," said Mark Bateman, who owned a video store a few doors down and saw his and other merchants' sales suffer without Wal-Mart pulling shoppers in.

Empty Wal-Mart buildings plague communities across the nation. At any given time, about 350 former Wal-Marts lie vacant in America, according to Al Norman of Sprawl-Busters, an organization that opposes big-box stores. At least nine empty former Wal-Mart spaces -- the equivalent of 12 football fields in size -- occupied North Carolina as of February, Norman said.

In Knightdale, plans are under way to close a Wal-Mart and build a supercenter a mile away. The retailer, however, hasn't found a new occupant for the existing building, which it owns. Wal-Mart is planning to market the space, said spokesman Kevin Thornton.

Supercenters -- which include full-service groceries and are about twice the size of Wal-Mart's discount stores -- help meet customers' one-stop shopping needs, Thornton said from the company's Arkansas headquarters.

They also make Wal-Mart more money, said James F. Smith, professor of finance at UNC-Chapel Hill.

"It's way more profitable, a way more efficient use of space," he said.

As of July, Wal-Mart had 81 supercenters in North Carolina, and only 34 discount stores.

The retailer's shift to massive supercenters, though, means more empty Wal-Marts in towns such as Hillsborough.

"It's just a giant hole in the community that can last for years," said Julia Christensen, a former university lecturer now writing a book on how communities reuse empty big box stores.

Christensen said the buildings' sheer size -- ranging from 60,000 to 200,000 square feet -- makes them tough to fill, especially when Wal-Mart or another big-box retailer restricts how its former sites can be used to avoid competition.

Despite the challenges, the infrastructure and locations of many empty big-box stores can be attractive for prospective businesses, Christensen said. Many of them are reused, living on as flea markets, churches or even schools.

Part of the Wal-Mart building in Hillsborough was converted in 2004 into a 10,000-square-foot Dollar Tree. Most of the space, though, remains vacant.

Hillsborough officials say they'd like to see their old Wal-Mart building become an entertainment spot.

"It'd be a perfect place for a bowling alley or a skating rink," said Margaret Wood Cannell, executive director of the Hillsborough Area Chamber of Commerce. "But so far, nothing."

The future of the empty space remains a mystery for its neighbors.

"I don't know what the holdup is," said Eric Rodgers, 46, an optometrist with an office at Hillsborough Commons. "I think it's too good a spot in the middle of a town that's growing to stay empty."

Several businesses have expressed interest, community leaders said, but none has been able to work out a deal with the companies that have managed the property, The Shopping Center Group and before that Florida-based Tricor International.

Former Hillsborough Mayor Joe Phelps said Tricor CEO Marc Hagle told him in 2004 that he wanted to market the property to national companies. Hagle -- who is also CEO of the property owner, Hillsborough Commons L.P. -- did not return multiple phone calls.

"It's very hard to get ahold of the rental company," Cannell said. "It does not appear that re-leasing the old Wal-Mart space is a priority for The Shopping Center Group."

Representatives from The Shopping Center Group said they respond to all inquiries but haven't found the right tenant.

That tenant can't be a department store or wholesale store, according to restrictions Wal-Mart imposed when it bought out its lease, which ran until 2009, said Thornton.

And with redevelopment in the works for nearby Daniel Boone Village and the soon-to-come Waterstone project between I-85 and I-40, prospective tenants may soon have some new, more exciting options.

Meanwhile, the Hillsborough Commons shopping center remains adrift. "Wal-Mart was the anchor," said Robin Taylor-Hall, president of the Hillsborough Area Chamber of Commerce. "When the anchor closes, it affects all the other stores."

Bateman sold his video store soon after Wal-Mart closed.

The new owner closed for good in May, and two more stores have closed. Just eight of the 15 retail spaces are occupied.

Losing Wal-Mart, Bateman said, left "just a dead feeling in that shopping center."

"Scamming the system" - More about corporate tax abuse

You saw a discussion on the need for Combined Reporting here on the 22nd ("Property Taxes: 'Why am I paying so much?' Part 2"). Now see it in the "mainstream."

What Wal-Mart doesn't pay, you do.

From Sunday's Milwaukee Journal Sentinel:

Wal-Mart owes back taxes, state says

Paying rent to itself cuts millions off retailer's tax bill

By STEVEN WALTERS and AVRUM D. LANK
swalters@journalsentinel.com

Posted: Aug. 25, 2007

Madison - Wal-Mart Stores Inc. has avoided millions of dollars in state taxes by paying rent on 87 Wisconsin properties in a way that the state Department of Revenue calls an "abuse and distortion of income."

As a result, state tax auditors say, Wal-Mart owes more than $17.7 million in back corporate income taxes, interest and penalties for 1998, 1999 and 2000. More could be due for later years.

Revenue Department lawyer Mark Zimmer argues that the world's largest retailer is not paying its fair share of taxes that support public schools, local police and fire departments and the highways it uses to transport what it sells in Wisconsin.

As a result, Wal-Mart shifts the burden of paying for those services "to individuals and small businesses who are unable to set up such elaborate mechanisms," Zimmer told the Tax Appeals Commission, which is considering the matter.

The charges are unusually aggressive for the state's tax-collection agency, and the case is being closely watched by tax professionals. Legislators, too, have become involved; some want to change state law to end the technique Wal-Mart is using.

Wal-Mart says it has not done anything wrong but is merely taking advantage of an overlap of state and federal tax laws: To reduce its taxes and costs, it sets up one subsidiary to run its stores and another subsidiary to own its real estate. The operating subsidiary pays rent to the real estate subsidiary and takes a tax deduction for the rent, even though that money eventually ends up in the corporation's own pocket.

Property taxes: "Why am I paying so much?" PART 2

Let's talk about one of the main reasons - besides sprawled, center-less conditions and resultant costs to communities like Franklin - that property taxes are so high and getting higher.

First, an interesting progression -

Share of total state tax contributed by corporations in Wisconsin:

1979: 10%

1989: 7.0%

2000: 4.6%

2006: 3.5%

The Dairy state is bad for business? Wisconsin was recently ranked 41 out of 50 states in businesses’ share of state and local taxes. A study found that 26 of the largest 35 companies based here paid no tax at all and further reported that 62 percent of companies that make over $100 million in revenue pay no state tax.

And as that corporate number goes down, the slack is taken up by property tax payers. This is a nationwide phenomena.

How do large corporations lower their tax burden? Well, they certainly have friends in high places. Republicans traditionally propose and enact legislation friendly to big business on the theory that what's good for them will trickle down to us eventually. The Bush administration has a long history of easing tax burdens for the top earners - corporate and individual - on the theory that this will stimulate the economy. Mike Moneybags will buy TWO houseboats instead of one, so the company building the boats gets more business and more workers are hired.

But politicians also know who butters their bread: Running for office is expensive, and those bucks come from corporations. And they want something in return.

Huge companies like Wal-Mart used their leverage and influence to lobby for seemingly inconsequential - and numbingly complex - procedural changes that have allowed for very aggressive, very "creative" tax avoidance of the sort that a typical home owner could never attempt. Wal-Mart was so comfortable with their position, in fact, that they sued North Carolina last year to obtain a $33 million tax refund. (Hold your nose and read Wal-Mart: The Low Tax Leader, Always.)

Amazing.

Let's not forget that Wal-Mart and the other big corporations and chains routinely demand and receive

• colossal tax abatements
• TIF funding
• land grants
• public service freebies
• interest-free loans
• condition-free grants, etc.

... from the very municipalities and states to whom, in return, they pay little or no tax.

Another bonus for big corporations: They are not required to report what they pay in state taxes on a state-by-state basis, which effectively obscures their deceptions.

On an estimated $852 million in Wisconsin profits between 2000 and 2003, Wal-Mart paid only $3 million in Wisconsin taxes. In theory, corporations in Wisconsin pay 7.5% income tax. Wal-Mart pays about 0.35%.   

You pay what they don't.

But the hubris of companies like Wal-Mart might cost them.

The evasions of giant corporations and big box chains are being looked at closely in the courts, and about twenty states have already taken a vital step toward making the tax system more fair to property tax payers and small businesses.

What are some ways that huge corporations avoid taxes?

The main tool of corporate tax avoidance is a scheme called SEPARATE ACCOUNTING. It's basically a way for multi-state corporations (i.e. big corporations that contribute to political campaigns) and businesses to cherry-pick where they will pay taxes (i.e. they will pay in the low-to-no tax state) while locating elements of their business  - - which use public utilities in each state - - all over the country.

Here's how Home Depot does it:

Home Depot has Delaware-based subsidiary called Homer TLC Inc - little more than an address. This is called a "passive investment company ("PIC"). Homer TLC Inc "owns" the company's trademark. Home Depot stores across the country pay the paper subsidiary a huge - and completely self imposed -  fee for the right to use the trademark, effectively shifting profits out of other states and into the Delaware subsidiary. Delaware does not levy corporate income taxes on earnings from intangible assets such as trademarks - - Magic time! Profits transferred in this manner are free of state corporate income taxes.

And that paper subsidiary will also lend money to the rest of the corporation, creating another stream of profit transfer via payment of interest on the loan.

Kmart shifted $1.25 billion into its Michigan subsidiary, Kmart Properties, Inc., from 1991 to 1995. Between 1992 and 1994, Limited Brands transferred more than $1.2 billion from its retail chains into Delaware subsidiaries.

Shady? Yes - - it's an utter sham, practically money laundering on an epic scale. But there are companies eager to package this dodge as a service. Arthur Anderson will get you set up with a Delaware trademark-holding company for $100,000. PriceWaterhouseCoopers sells a comprehensive plan it titles "Utilization of an Investment Holding Company to Minimize State and Local Income Taxes."

Is it any wonder a giant like BP Oil can pay pennies in state taxes? From the Milwaukee Journal Sentinel:

Scott Dean, a spokesman for BP, said the company "pays its fair share of taxes, no matter how you approach the numbers."

Revenue Department reports say BP companies paid $27,037 in corporate income taxes from 2003 through 2005, while the company reported worldwide profits of $48.3 billion. Dean said those taxes were paid by one subsidiary, BP Products North America, which has a company-owned gas station in Pleasant Prairie.

A gas station pays $27k in three years? Find me a locally-owned gas station - or hardware store, or craft shop, or plumber - which uses public utilities and has somehow paid less than $27,037 in business income tax any three year period.

That's right --- locally-owned businesses (the ones that pay full-time workers a living wage) do not have these dodges available to them. They pay full-boat taxes, and thus are dying off at a stunning rate, replaced by big-box chains that pay minimum wage, low-to-no benefits, and then pay negligible taxes.

NO contribution to the local school district, for instance. You pick up that cost.

Where's the good in that?

Companies known to engage in the "PIC" sham include

• Circuit City
• The Gap
• Home Depot
• Ikea
• Kmart
• Kohl's
• Limited Brands (which owns Bath & Body Works, Victoria's Secret, The Limited, and several other chains)
• Payless Shoes
• Sherwin Williams
• Staples
• Toys "R" Us

(source: The New Rules Project).

Let's make this clear: What these companies don't pay has to be picked up elsewhere.

So, your PROPERTY TAX is going up? Sure, scrutinize the school district's spending (all government spending should be looked at), but also hold business to their side of the social contract.

Solution: Make it FAIR with Combined Reporting

About twenty states have begun to turn things around by instituting COMBINED REPORTING requirements.

Combined reporting requires that companies combine profits from all related subsidiaries before determining what portion of their profits are taxable in that state. (To determine how much of their total earnings are taxable in each state in which they operate, multi-state companies must apportion their profits according to formulas which consider how much of the firm's property, payroll, and sales are in each state.)

States with combined reporting are effectively able to tax the percentage of an out-of-state subsidiary's profits that can legitimately be attributed to a firm's in-state operations. Combined reporting has been upheld by the U.S. Supreme Court.

This is not a "leftist agenda" idea. When Republican candidate for president Mitt Romney was governor of Massachusetts, he took a long, hard look at their fiscal inequities and proposed Combined Reporting for the state - - before he was "taken aside" by the entities that he needed for re-election and/or a presidential run; he withdrew his proposal once he woke up to political reality (hint: $$). However, the wheels were already in motion; with the option on the table, several Massachusetts think-tanks and government committees agreed that Combined Reporting would be good for the state's economy and lessen individual tax burdens. Now Governor Deval L. Patrick - a Democrat - has footing to institute the change.

Elsewhere: The Pennsylvania Department of Revenue's commission recommended that "the state adopt mandatory unitary combined reporting as a means of broadening the corporate tax base and lowering the tax rate."

Combined Reporting is part of the Wisconsin Senate-passed state budget. Assembly Republicans are opposing that budget. The Republican spin is that requiring Combined Reporting is a "tax increase" for business and will therefor drive business away. Sample that vibe here; Republican state senator Neal Kedzie assures us that big businesses - tax-paying or not -  are so very good for us:

They create jobs, provide health insurance for their workers, stabilize and grow local economies, provide a wealth of goods and services to improve our own way of life, and from time to time, engage in charitable causes for the good of their community.

A rosy picture of our friend, the Big Business.

"Provide health insurance"? Sometimes, and only begrudgingly. And if they let you work enough hours per week to qualify.

"Stabilize and grow local economies"? Make no mistake - even after a city or town provides tax breaks and incentives, they pull out as quick as they go in.

"Provide a wealth of goods and services to improve our own way of life"? Not provide - sell. 

"And from time to time, engage in charitable causes for the good of their community"? With the exception of a few truly community-minded businesses (and they are out there, make no mistake), that's small consolation when the alternative is that they merely pay their fair share - and be a true part of the community.

Why are your property taxes so high? Because someone has to pay for the way communities like Franklin sprawl without regard to sustainability or integrated planning - - and it sure isn't going to be the corporations who pay to get lawmakers in office.

And, of course, they love it when the finger is pointed at the local school district's "greed," effectively distracting us from the fact that Wal-Mart CEO Lee Scott makes $8,434.49 per hour while his stores avoid paying school district-sustaining taxes and his workers flood the social services of every state in the country.

We need to watch what our property tax money is spent on, but we also have to make sure everyone pays their fair share.