Kowalko OpEd – Time for Public Outrage Over Delaware’s Corporate Welfare
IS DELAWARE WILLING TO GIVE AND TAKE AT YOUR EXPENSE?
Delaware taxpayers are once again being asked to close their collective minds and open their collective wallets. Another grotesque giveaway to another wealthy corporation has been proposed. Instigated, orchestrated and supported by the Chamber of Commerce, the Business Roundtable, Delaware’s State Department, the Administration and a vast number of corporate shills that occupy the General Assembly we are once again being cajoled to give millions of dollars to a profitable company under the guise of economic development. In the past 9 years these corporate welfare policies have cost the Delaware taxpayers well over $250 million most of which was funneled into the coffers the richest corporations in the world. There has been little to no economic development or sustainable job growth resulting from this corporate extortion racket. This number does not include the more than $80 million forfeited to wealthy corporations with the recent passage of the Delaware Competes Acts and Delaware Innovates Acts.
The similarities in some of these arrangements often show an utter disregard for economic prudence and justice. The recent Sallie Mae request for more than $2 million in taxpayer funds connotes an attitude of entitlement and greed which is reinforced when we consider the recent report of over $70 million in 2nd quarter earnings declared by Sallie Mae. This causes me to reflect on the $10 million requested and granted to JP Morgan Inc. after they declared a record $24 Billion in profits. These are not isolated incidents but rather common occurrences resulting from Delaware’s policies of unbounded enthusiasm to finance corporate welfare.
When you reflect on the actual economic circumstances challenging Delaware’s residents and taxpayers such as over $30 million in cuts to public education, elimination of the $2.5 million “Pharmaceutical Assistance Program” which served the neediest elderly and disabled citizens of Delaware (forcing them to choose between life-saving medications or life-giving food) no one should cast blind eye on such economic cruelty.
Historically there has been a certain consistency to the course plotted for Delaware’s economy. It seems to willfully avoid the needs of its citizens and small business community and instead focus almost entirely on ensuring a robust investment in the wealthier corporate world. Sadly such an investment of taxpayer money seldom results in any significant job growth or return on investment. The Bloom project is a prime example of government wasteful spending on private, special interests.
And what should be the public’s responsibility to stop this madness you might ask. The public must express a collective outrage and convey it to every elected official in the Delaware. If their voices are loud and persistent but are still ignored then it is the humane obligation of the public to replace every one of those legislators and elected (regardless of party) with new people who are responsible to the needs of the people and not to some corporatist culture or ideology.
I’m outraged and have been every step of the way for my entire 6 terms in office. I’ve expressed it publicly, criticized it in the media and on my Facebook site and begged and cajoled my colleagues and the three Governors I’ve served under to cease and desist. It’s time for the public to step up and be outraged. When you became aware (unless you’re living in a rabbit hole) that $70 MILLION in taxpayer money was spent on roads and egress to the ASTRA-ZENECA site to enhance its sellable price-tag tenfold where was the outrage. It’s been reported on in the major media sites and I’ve written extensively about this state’s corporate welfare (including Astra-Zeneca, JPMorgan, Dupont, Chemours) policies apparently to a deaf, dumb and blind constituency. Bring the outrage please, bring it.
Representative John Kowalko
14 Kells Ave Newark DE 19711
John.kowalko@state.de.us
302 547 9351
But wait. Wasn’t Rep. Kowalko one of the co-sponsors of (and a fervent cheerleader for) the Bloom Energy bill back in 2011? That law committed Delmarva Power customers to subsidizing Bloom Energy for twenty years, at the present tune of about $35 million a year.
Rep. Kowalko has, I think, said he regrets his earlier Bloom decision saying that he was mis-informed. But such an apology is hardly any comfort to DP&L customers who still bear the monthly Bloom Energy surcharge burden with no end in sight. If everyone now sees the Bloom thing was a mistake, why has not Rep. Kowalko (or any other legislator) done the right thing and stood up and introduced legislation to end the fiasco?
I agree with everything Kowalko wrote, and readers know that I have hardly been his strongest defender here.
My wife is a pharmacist, and she has had a lot of clients who are suffering as a result of the heartless elimination of the pharmaceutical assistance program. Just a cold-hearted decision made by our Democratic governor and a Democratic General Assembly.
The only way to change this is to get rid of corporate D’s and replace them with genuine humans who possess a collective conscience. If you see yourself as one of those humans, run for office.
The New Journal Editorial board is finding its courage as well. I can only assume the recent changes are for the good. Especially Matthew Albright’s move from Legislative reporter in Dover to Engagement Editor.
http://www.delawareonline.com/story/opinion/editorials/2017/07/24/taxpayer-funded-corporate-welfare-needs-stop-editorial/506122001/
Well done.
The News Journal article today said only 4 of the 9 members of the Council for Development Finance showed up to the Sallie Mae hearing. And only Fred Sears asked one question…how’s that for tough questioning and rigorous oversight of public money??
“The New Journal Editorial board is finding its courage as well.”
That’s the funniest line I’ll read all day.
I think we’ve found the progressive challenger to John Carney…..
Well, they’ve written two pointed editorials as a board and Albright personally has written two under his own byline in the last two and a half weeks. I think the last Engagement editor wrote one in total (about Purzycki v Young at the debate). So that’s a marked improvement.
We all know the paper isn’t as great as when you where there. We get it. Everything sucks after you leave and will always suck without you. Do you feel better now?
Sorry, dude, but it sucked the entire time I was there, too. And if you think the Gannett Corp. wouldn’t take government money if it was offered, you’ve got a little case of the Stockholm yourself.
The “editorial board” is the publisher and several other business-operation top dogs, but in practical terms it’s just a rubber-stamp. The News Journal is a small business first and foremost, and will cheerlead anything perceived as being good for small, local businesses because those are its advertisers.
The last engagement editor was also the sports editor. They weren’t paying him to write editorials. The reason the line was funny is that the News Journal editorial board has no courage to find.
PS: Ask anyone who worked with me. I have never been anything but harshly critical of the paper, even when I worked there.
I found Albright’s editorial about the “legacy” of Mayor Williams (on the back of Jedra’s reporting re: the City Council slush fund) very pointed. Hadn’t seen anything like it in a while.
Also, today editorial board piece on the Delaware Way’s beloved public private partnerships (a.k.a. corporate welfare) also very good.
I’m under absolutely no illusions that anyone over there is on the verge of a Pulitzer, but I’m giving credit where it’s due if I see improvement.
We should definitely keep riding them so we get more of this. But not recognizing when they do this doesn’t help in my view.
Fair enough. I will concede the improvement, while noting there was plenty of room for it.
It’s an admittedly low bar, yes.
Mike Barbieri pushed out of his job, after controversy with his business and other issues. Word is Patty Blevins recently “retired” at end of June too from head of animal control. So much for that National Search the state passed on! Ex-legislators not faring so well in real state jobs.
Well, those post-legislative gigs didn’t last long. Both exits are so un-Delaware Way. Coincidence, or an unseen hand? Enquiring minds want to know. Could Rebecca Walker be next? She sure SHOULD be.
Well, after Tiny Tony, that is. And Tony’s exit would likely pave the way for Tony’s Pal in Career Mediocrity John Viola to leave DOL as well.
Chris wrote:
How does four out of nine constitute a quorum to do business?
In Delaware, Fred Sears probably counts as a majority of one by himself.
He’s on anybody’s Top Ten list of Delaware Way insiders. He’s got his fingers in everything.
Hey! No asking questions! It’s a public-private partnership so no information for you!
4 out of 9…they had to postpone it until August 28, when then they will rubber stamp it.
I hate to break it to you, but Delaware is no longer a destination to corporations. Thanks to its high taxes, poor education system and generally anti business culture, you have no choice but to pay corporations to stay. They can go anywhere they want. So rip your more middle of the road democrats, but they need to be adults and accept reality. And here’s an idea, take the money pAid to barbieris replacement, the money the city of wilmington doles out to insider charities, patty Blevins insider salary etc etc etc and I’ll be you will have enough money for senior citizen drug programs.
Geoff – You’re correct.
PS. No $$$ to Sallie Mae either.
Geoff Langdon for Governor!
You lost me at “high taxes.”
I know you are lost, you see any corporations beating down Delawares door to locate here?
If you think luring corporations here is some measure of political, social or cultural success you’re a sad confused person. I’d argue it’s not even a good idea economically. You’re a dumb ideologue.
If you think taxes are too high you’re just a rube.
Stop wasting our time embarrassing yourself and the entire langdon family. May I guess why the “l” is lower-case?
It was never a huge secret that very high paid corporate execs did not like the approximate 6.9% corp income tax rate for earnings over 60K….
I couldn’t care less. And If we all work a little harder very soon fucking politicians won’t have to care either. Just wait.
Wow, so it’s your objective to make delaware a place where corporations don’t want to locate. And I’m the idealogue, lol. You hate them so much, you have thrown common sense out the window. Sorry, you need them here. What social program, notice it’s singular, are you planning to run on the remaining tax receipts after you run them out of town. Go back to the sixties
The idea that anyone’s running out of town is hysterical and based on zero evidence. It’s disgusting scare tactic like a ransom.
This notion that huge corporations are on some sort of financial knife’s edge and any additional burden would be catostrophic is a lie.
It’s just something you say…
(Also, as an aside, is the sixties comment a way of saying “cut your hair, you hippie”? If so, that’s extremely clever… —RV)
I didn’t say it was catastrophic to large corporations, Its catastrophic to Delaware. So like it or not, you have to build a state where they want to locate. With respect to your comment of zero evidence, can you name a big company that has located here in ten years without financial assistance? if Delaware was a destination, quality schools, low crime, competitive tax structure, they could tell compAnies to go elsewhere, but they can’t. It’s reality
Geoff Langdon is the smartest person on this site, including Kowalko.
“take the money pAid to barbieris replacement, the money the city of wilmington doles out to insider charities, patty Blevins insider salary etc etc etc and I’ll be you will have enough money for senior citizen drug programs.”
“Geoff Langdon is the smartest person on this site, including Kowalko.”
The first quote directly disproves the second.
What the statement proves is the G Langdon has absolutely no idea how much capital is parked here because Delaware is a Tax Haven. Anytime someone believes specific government “waste” is anything but a tiny drop in the bucket is either clueless or a liar.
Patty Blevins salary ($80k) plus DHSS Addiction chief (~$200k), and money directed to charities by the city council (~$600k) amount to less than one million dollars. This is proof positive that you have no fucking idea what’s happening.
The filthy rich reap millions and millions a month just for hiding money here and this guy thinks Patty Belvins’ salary is even worth mentioning. No clue.
Can you imagine?! He thinks those items, totaling around 900 grand is the “real issue.”
Geoff Langdon is a fucking joke.
This is great, ok so exactly how do people or corporations park money here?
You really don’t know? Is this guy serious or are we delving into some elaborate practical joke?
Here’s some reading for today:
http://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html?mcubz=2
https://www.theatlantic.com/business/archive/2016/10/dont-blame-delaware/502904/
“To understand how and why states are losing out on this money, it’s important to understand how the “Delaware loophole” works: A company sets up a subsidiary in Delaware, and transfers an intangible part of its business there—say, its trademark or naming rights. Then its other locations outside of Delaware pay money to the subsidiary in order to use that trademark. Since intangible assets are not taxed in Delaware, the company doesn’t have to pay taxes on the money that was transferred to the subsidiary. The company can deduct the cost of the royalties on its state returns in other states where it operates, and thus avoid a large share of the state income taxes it would have otherwise owed.”
http://www.investopedia.com/articles/personal-finance/092515/4-reasons-why-delaware-considered-tax-shelter.asp
https://www.theguardian.com/us-news/2016/apr/06/panama-papers-us-tax-havens-delaware
“In every state in the US, you can incorporate an LLC – [a limited liability company] – or another legal entity and you don’t have to disclose who the beneficiary on it is. In fact, Delaware is so synonymous with anonymous companies and ghost corporations that it was named in Transparency International’s Unmask the Corrupt campaign as one of the most symbolic cases of corruption.”
Delaware is a tax haven for any company that incorporates here. That has nothing to do with actually being here and hiring here. Google benefits from your “tax haven” and they havent hired one Delawarean. So what you fail to realize RE is that you have no idea what you’re talking about.
This is why we liberals never get to sit at the adult table. Too busy living in a fairy tale. And Kowalko is Gandalf.
Ha! You’re a joke. Aggregate the number of people employed by banks and financial institutions in the state and think about why those companies are here. I’ll even give you a hint… It’s not a coincidence. So in fact those loophole do indeed impact hiring.
@bane: Geoff used the term “corporations,” the first indication he didn’t know what he was talking about, when he meant “employers.” Two different things.
You don’t, either, if you think Delaware’s future depends on wooing companies to relocate here. That’s the whole problem with this corporate welfare — it goes to the richest companies rather than the poorest.
A company that’s willing to move to your state because you’ll let it pay no taxes is like a guy who cheats on his first wife and marries his mistress — he’s going to cheat on her, too. A company that demands tax breaks or it won’t hire people is, of course, more like a rapist.
These poor nitwits have been duped by the “job creator” con.
I do understand that the biggest issue is the LLC franchise deal. Those set-ups employ nobody but a few attorneys.
But if you think companies that actual employ people here don’t take us to the cleaners using the same or similar rules, you are a very credulous person.
Incorporating is not the same as acquiring an LLC license in Delaware. For no tax burden whatsoever (that Corporations formed here must pay) LLC’s enjoy a superior protection from liabilities for a $300 fee per year. All 870,000 of those LLC’s in Delaware also enjoy an impenetrable anonymity which allows for single or multiple entities forming a Delaware LLC to conduct elicit, illegal and other inappropriate activities if they so choose. The recent ongoing expose of the Manafort, Ukranian, Russian etc. money laundering scheme reveals that those parties have collaborated and joined assets and influence via Delaware LLC licensing. El Chapo had his ongoing criminal enterprise legitimized as a Delaware LLC and there are countless others (including Milken types, terrorist funders, drug smugglers, money launderers and your average, everyday, fraudulently intended businesses) who wear the cloak of secrecy provided by current Delaware LLC laws. When I submitted legislation (HB57) to change a minuscule portion of the current LLC law to require agents forming LLCs on behalf of certain businesses to crosscheck their clients backgrounds and other affiliations with the Federal watch lists I was met with a firestorm of resistance from the Corporate Bar Commission (a group of Corporate Law firms that earn millions of dollars acting as agents for LLC licensees). These firms are among the most prestigious and influential law firms in Delaware and the requirement would have been a matter of visiting the federal web site to cross check listings of actors and countries that are on this list. When “Richard, Layton and Fingers” (in the till???) and other notable corporate law firms manage to have their own employees elected to the general assembly you can literally smell the influence peddling being exuded. When a noted corporate bar member elected to the Senate personally resists efforts to reinstate banking reform measure such as “Glass-Steagall” you have to question where their loyalty lies. When a noted corporate lawyer with the aforementioned Layton and Fingers firm enjoys the privilege of sitting on the House Judiciary committee and nearly singlehandidly prevents HB 57 from emerging to the floor for a vote of the full House, one must ask where her loyalties lie. I suspect that Rep. Smith must have had a good reason to not recuse herself from the vote but I cannot fathom what it might be, just as I cannot fathom what harm, if any, this bill would or could cause to Delaware. Here is the synopsis of HB 57:
To obtain obedience to federal laws protecting national security, with the help of registered agents, this Bill will prevent the use of our Limited Liability Act by persons and nations identified by federal agencies as a threat to this country. The bill also seeks to prevent existing limited liability company owners who are on the lists of prohibited persons or governments, but may have formed a Delaware LLC already, from getting involved in industries in which the federal government has placed restrictions on certain investments. Requiring clearance from the Committee on Foreign Investments in the U.S. for their plans will enable the Secretary to waive this provision when it is received. Registered agents must be the parties to screen for identified threats because those with a contract with the Department of State enter applications on its computers on a regular basis. CFIUS seldom prevents investments, (two since 1989 to be precise) but it may ask for mitigation in some way to reduce the potential threat involved. This Act will not impact the ability of almost any applicant to easily form an LLC nor does it require any companies to disclose more information to the Secretary of State in its application for certification than is now required.
Representative John Kowalko
Yes I know all about Delaware investment companies. Delaware set up a tax strategy to fleece other states. This law has been around since about 1970 and virtually every other state has closed the loophole. So it application is limited now and it’s laughable that you want to tax it. And setting up an llc here in Delaware when you don’t do business here is the states cash cow. We get money. So again, how do individuals and companies located here get out of paying taxes here
“how do individuals and companies located here get out of paying taxes here”
Do you seriously not know the answer to this question?
I don’t understand why people mention the banking industry as an example of how ALL employers enjoy some taxless utopia here in DE. The Financial Service industry enjoys specific benefits outlined in code to attract those companies. So to act as if ALL employers and corporations have the same breaks that Chase or CapitalOne enjoy, probably means you missed a few days of school and really need to work hard to catch up.
as I have said, you can all rip companies, claim they don’t pay taxes when they do. You need compAnies here. if Delaware was the tax haven you claim, companies would be beating down delawares doors which they are not. High utilities, high unemployment comp, high workers comp, high, high , high. High crime. Whoops low test scores. So you rip carney, smith, schwartzkopf and feel rightgeous because you can, sitting in front of your computer. But they are dealing with reality. MR kowalko, why don’t you try to recruit a large company to locate here.
If you all were actually making the decisions for this state, we would all be growing tomatoes at the commune. But you are safe, you will never be in that position. So feel good about yourself sitting in the cheap seats
” if Delaware was the tax haven you claim, companies would be beating down delawares doors which they are not.”
This isn’t about Delaware being a tax haven for its actual businesses (it is popular as home to shell companies, though). Most business-publication rankings put it in the middle somewhere. You can find lots of them online. Here’s one:
http://www.cnbc.com/2016/07/12/americas-top-states-for-business-2016-the-list-and-ranking.html
It ranks Delaware 37th overall, but 11th on “business friendliness.”
We’re talking about giving money to corporations without keeping track of what we got for that money. That’s all. Most of the deals in which we “give money” to corporations involve waiving their taxes, not handing them actual cash.
What part of this don’t you get?