Dear “Progressives”

We warned you. Oh, yes we did.

“When you raise the taxes on the parts of our society that produce wealth, the wealth moves”

That’s especially true when the taxes you’re raising make the producers of wealth – companies, in this case – less competitive in a global marketplace with other companies that produce wealth and get less of a tax hit.

Two weeks ago, it was Medtronic packing up its corporate plantation moving to Ireland for a much, much, much better tax rate.

This week? Word that Walgreens is planning a similar inversion with a company in Switzerland.

And after news that Nash Finch and Advance Auto Parts are leaving Minnesota largely because of the DFL’s tax orgy, and Red Wing Shoes and Laurence Transportation shelving major expansions because of that same tax policy, i’m wondering how much longer the DFL can hide behind the the headlines about Minnesota’s phantom, low unemployment rate.

(Which translates to “low unemployment in the metro, where all the Fortune 1000 companies are, with the market a little less reassuring outstate…)

Posted

July 2, 2014

Business, The Economy and The Markets, Minnesota Politics, Taxes

Mitch Berg

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9 responses to “Dear “Progressives””

The Big Stink

July 2, 2014

Let’s not overlook the 60-somethings who, faced with retirement, are bailing out of the state faster than a bag of White Castle’s on an empty stomach.

And, they’re taking their money with them.
Scott Hughes

July 2, 2014

“Red Wing Shoes and Laurence Transportation shelving major expansions because of that same tax policy”

WOW ! Red Wing Shoes will celebrate their 110 anniversary next year, if demand is there they’ll expand somewhere, maybe some tax friendly state will re-name a town Red Wing, that might give a leg up for a plant.
Powhatan Mingo

July 2, 2014

We know that liberals can’t blame the move on corporate greed, because every Lefty knows that corporations aren’t people, and only people can be greedy.
Because Lefties really do believe corporations, just like people, can be cruel, greedy, etc., and greed should be punished or at least forbidden from doing ‘bad things’, they will respond by trying to forbid Walgreens from moving.
But of course a corporation has many options when it comes to improving their bottom line. If they have to stay, Walgreens might close stores, or reduce employee wages, for example.
Liberals do not understand economics.
justplainangry

July 2, 2014

We’ll always have LRT…
nerdbert

July 2, 2014

There is no tax hit to Uncle Sam with the inversions. The companies in question make money overseas and right now they refuse to repatriate that money because to do so would subject it to double taxation and at a higher rate, something that is unique to the US.

Of course, it’s the Progs who complain about a lack of “investment” here, but think of all the jobs that Medtronic could create if it got access to its overseas profits. Apple, IBM, GE and a ton of other companies have piles of cash overseas that will never be touched or used in the US absent the inversion. Strangely enough, the inversion may actually make *more* investment possible in the US since that frees up the company to move money into the US for product development.

So yes, the Demonrats are actually promoting a policy that promotes moving jobs overseas with their desire to double tax overseas profits, since right now the only sane way to use the money overseas is to do your R&D and production overseas with the money you can’t bring back to the US.
Night Writer

July 2, 2014

Red Wing Shoes can easily build a new warehouse and fulfillment center a couple of paces across the border in now friendly Wisconsin.
bikebubba

July 2, 2014

Per NW’s comment, it’s scary how quickly an adverse tax situation can override the expense of relocating. If you want an example of how out of control our government is, that ought to do it.
Powhatan Mingo

July 2, 2014

Walgreens’ net profits are run-of-the-mill for a large, mature company, about 3%:
http://www.stock-analysis-on.net/NYSE/Company/Walgreen-Co/Ratios/Profitability
That kind of company finds it very difficult to significantly increase marginal profit. Increasing revenue per store is almost impossible in our flat to no or negative growth Obama economy, and opening new stores is not advisable, either. So you start looking at how you can decrease operating expenses. Not a lot of options are available if you want to beat the forecasts. If you can’t save on corporate taxes, the next steps considered (I imagine) will be closing less profitable stores, or reducing manpower costs.
All to make a fraction of a penny more or less on about three cents profit per dollar invested. Business economics is brutal.
bosshoss429

July 2, 2014

I believe that Red Wing Shoes already has a significant presence in MO, UT and TX which is their jump off point for the Latin American market.

Also, IBM has been quietly reducing their work force at their facility in Rochester. Last I heard from a friend with close ties to execs there, is 350 by end of Q3.