Competing for business benefits corporations, can cost taxpayers
Two-thirds of Wisconsin corporations are able to use creative accounting, tax breaks from the state, or both to get out of paying any income tax to the state.
FOX 11 Investigates filed open records requests with the Department of Revenue to see how much Northeast Wisconsin's biggest businesses are paying.
The result, out of 24 companies we checked into, 20 paid no net income tax to the state in 2011 according to the Department of Revenue. Among them familiar names like Kohler, Mercury Marine, Kimberly-Clark, Oshkosh Corporation, Green Bay Packaging, KI, Schneider National, Plexus, and JBS Packerland.
FOX 11 shared the list with Kevin Quinn, an economics professor at St. Norbert College, who is familiar with that state's complex tax code.
"I think when you look at it at this level it does begin to get to the point where it doesn't look fair," said Quinn.
Without revealing a list of corporate names, the Department of Revenue acknowledges 65 percent of corporations in the state did not pay any Wisconsin income tax in 2011.
Humana in De Pere was among the remaining 35 percent of corporations that ended up paying the roughly $10 billion collected that year. Humana was one of four on our list of local corporations that paid income taxes in 2011. It paid more than $4 million in state income tax, according to the Department of Revenue.
Humana officials would not talk to FOX 11 Investigates on camera. But a review of state records show, Humana did not receive any tax credits from the state to help reduce the amount of state income tax it owed.
"Oh I'm sure they have people seeking benefits from the state, the question is how successful they are," said Quinn. "I think it's a little bit easier for manufacturing companies right now to play those games."
Quinn points out manufacturers like Mercury Marine in Fond du Lac routinely are being lured by other states to pack up and relocate. That prompts the state, like it did for Mercury Marine in 2009, to offer up tens of millions of dollars in incentives to keep the companies and their jobs.
"I think for Humana to say we're going to pick up and leave Wisconsin is a less credible threat. I think that's why that's not reflected in their ability to extract quite as much as some other firms are," added Quinn.
In all Wisconsin Economic Development Corporation awarded $330 million to various companies just last year in an effort to grow Wisconsin business. Many of the companies receiving tax credits are reporting big profits, like Plexus Corporation in 2012.
"Why is a company like that, that's making good money needing tax credits from the state?" asked FOX 11 Investigates reporter Mark Leland talking to WEDC Secretary Reed Hall.
"Well I think a lot of times it's all fact intensive. What kind of situation they present to us. But in this global economy and certainly nationwide economy, we're seeing companies have offers from multiple states," said Hall.
Hall says the state needs to offer up money to compete.
"Doesn't that force other taxpayers to make up the difference?" asked Leland.
"Yes, you're right," acknowledged Hall.
"Well it comes from taxpayers," agreed Scot Ross, who heads up the democratic-leaning government watchdog group One Wisconsin Now.
Ross says government is caught up in a cycle that caters to big business over small companies.
"There's always going to be an Alabama and when there aren't any more Alabamas there's going to be a Honduras to simply say if you don't give us what we want we'll take our toys and go someplace else," said Ross.
"As long as other states are offering incentives I don't think we'll be able to stop offering incentives," said Hall.
Hall says the state offers incentives to companies big and small that will grow in Wisconsin. And since 2010 has been able to help create more than 15,000 new businesses.