Gov. Walker's WEDC "Loses" over $8 Million in Loans

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snoqueen
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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby snoqueen » Thu Nov 19, 2015 9:29 pm

david cohen wrote:So how do I get tax credits that I can sell and raise capital? I *really* need a new Audi S8;)


If I understand what he wrote, you could also buy tax credits for 80 cents on the dollar and put your tax savings toward your new Audi.

What if I bought somebody's EITC credits and applied them to my taxes? Do ordinary mortals get to do that?

Nah.

Obviously the states do not issue their own currency these days, but this is the next closest thing as far as I can tell. The catch is they only issue it to certain entities.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby HawkHead » Fri Nov 20, 2015 8:42 am

willystresident wrote:HawkHead, I'd expand by saying its not just non-WI companies that need to sell the credits. Pretty much all tax credit recipients aren't turning a profit and have no tax liability to begin with, so they sell the credits.


Sorry, willy, but you are a little off on this one. The vast majority of business in WI that are qualifying for the credits are either S-Corporations or Partnerships. So while the credit is "allocated" to the business, the business is a pass-through entity and passes the credits to the owners/partners. The owners can then use the credits to offset other WI income. Only C-Corp use the credits because they have their own tax liabilities. C-Corps are very rare at this point.

I have a client that makes over $500,000 a year in income from his business. He actively invests in an angel investment group and has other means to grab WI credits. His WI tax should be in the $35,000 annually. He bought $100,000 worth of credits for $50,000 and basically lowered his WI tax rate by 50%. He hasn't paid WI income tax in over 3 years.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby HawkHead » Fri Nov 20, 2015 8:47 am

snoqueen wrote:
david cohen wrote:So how do I get tax credits that I can sell and raise capital? I *really* need a new Audi S8;)


If I understand what he wrote, you could also buy tax credits for 80 cents on the dollar and put your tax savings toward your new Audi.

What if I bought somebody's EITC credits and applied them to my taxes? Do ordinary mortals get to do that?

Nah.

Obviously the states do not issue their own currency these days, but this is the next closest thing as far as I can tell. The catch is they only issue it to certain entities.


EITC credits are non-transferable and the people who qualify for that credit wouldn't trade them for half their value. It is the Angel Investment and Venture Capital credits that are being bought and sold in bundles. The usual way is you get a venture capital group that has members all over the USA. They make a large investment into a qualifying company. Then the WI residents buy the credits off of the non-residents members of the group.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby snoqueen » Fri Nov 20, 2015 9:12 am

The vast majority of business in WI that are qualifying for the credits are either S-Corporations or Partnerships. So while the credit is "allocated" to the business, the business is a pass-through entity and passes the credits to the owners/partners. The owners can then use the credits to offset other WI income.


OK, I have a real question. (I was pretty sure nobody receiving EITC would sell their credits even if they could.) Can the business owners who buy the tax credits apply them to personal income, or only to their business income, or is there a gray area (maybe with how partnerships treat the benefit)?

The tax code is obviously a public document and is no secret, but if the general public focused on some of these provisions I think they'd be disgusted at the extent to which the code has been written to the benefit of those with the greatest access. This of course is part of what Bernie Sanders and even Elizabeth Warren are trying to tell us, but it's not easily expressed in a sound bite so it doesn't get the attention it deserves.

In the matter of business tax credits, from what I can tell the state is choosing to reduce its revenue from corporations and those corporations get to convert this benefit (by selling the credits) to cash in hand, while passing the benefit to other corporations (not specified or listed) who get to reduce THEIR state tax liability too. All these benefits happen above the heads of the middle class taxpayer. I doubt this is what the middle class taxpayer would vote for if he or she knew the details. We should at least get a count of the jobs "created" and the personal income "created" to see if we got our money's worth.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby HawkHead » Fri Nov 20, 2015 9:19 am

snoqueen wrote:
The vast majority of business in WI that are qualifying for the credits are either S-Corporations or Partnerships. So while the credit is "allocated" to the business, the business is a pass-through entity and passes the credits to the owners/partners. The owners can then use the credits to offset other WI income.


OK, I have a real question. (I was pretty sure nobody receiving EITC would sell their credits even if they could.) Can the business owners who buy the tax credits apply them to personal income, or only to their business income, or is there a gray area (maybe with how partnerships treat the benefit)?

The tax code is obviously a public document and is no secret, but if the general public focused on some of these provisions I think they'd be disgusted at the extent to which the code has been written to the benefit of those with the greatest access. This of course is part of what Bernie Sanders and even Elizabeth Warren are trying to tell us, but it's not easily expressed in a sound bite so it doesn't get the attention it deserves.

In the matter of business tax credits, from what I can tell the state is choosing to reduce its revenue from corporations and those corporations get to convert this benefit (by selling the credits) to cash in hand, while passing the benefit to other corporations (not specified or listed) who get to reduce THEIR state tax liability too. All these benefits happen above the heads of the middle class taxpayer. I doubt this is what the middle class taxpayer would vote for if he or she knew the details. We should at least get a count of the jobs "created" and the personal income "created" to see if we got our money's worth.


Only C-Corporations have their own tax. So C-Corporations can use their own credits to offset tax on profits.

Partnerships and S-Corporations are pass-through entities. All of their income is reported on a business tax return and then the income/loss is allocated to the owner/partners and the owner/partners report the income/loss on their personal returns and are taxed at an individual level. So Company A makes $100,000 and has 3 partners. They own 50/30/20 of Company A. Partner B reports $50,000 in profits from Company A on her personal return. Partner C reports $30,000 in profits from Company A on her personal return. Partner D reports $20,000 in profits form Company A on her personal return. Credits earned by Company A would be allocated the same way and used on the partners personal returns.

Individuals can also directly invest in companies and receive the credits directly. They can use the credits to offset their individual income.

Any of the above can trade or sell credits assigned to them.

snoqueen
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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby snoqueen » Fri Nov 20, 2015 9:27 am

Thanks for the quick reply. Very interesting. Just about anybody can be part of a business partnership, so some of the benefit of these credits makes its way to individuals at lower income levels if they get good tax advice.
Last edited by snoqueen on Fri Nov 20, 2015 9:35 am, edited 1 time in total.

willystresident
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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby willystresident » Fri Nov 20, 2015 9:35 am

HawkHead wrote:Sorry, willy, but you are a little off on this one.


I extrapolated from my experience with LIHTC and Historic Preservation Tax Credits, where developers syndicate up front for cash. Its interesting how differently they're used, but makes sense.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby willystresident » Fri Nov 20, 2015 9:37 am

snoqueen wrote: if they get good tax advice.


...and thats the problem...and an outreach role where WEDC is lacking.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby HawkHead » Fri Nov 20, 2015 10:42 am

snoqueen wrote:Thanks for the quick reply. Very interesting. Just about anybody can be part of a business partnership, so some of the benefit of these credits makes its way to individuals at lower income levels if they get good tax advice.


But it doesn't happen that way. You need to "know" the right people. Most investments are a minimum of $5,000 and these are very risky investments. If I spend $5,000 to get a $1,250 credit I am still $3,750 out from what I originally had. If the company goes under (which it seems like for every 1 homerun you get 20 that go under) you are out $3,750. Lower income level individuals don't just have $5,000 to invest in a high risk investment. If a client who made $50,000 a year came to me about a $5,000 investment like this I would highly recommend investing in the market if they could afford losing the $5,000. There is a lot less volatility in the stock market than the Angel Investment start-ups.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby Henry Vilas » Mon Feb 15, 2016 7:15 pm

WEDC fraud bill stalled in state Senate

Sounds like a case of conflict of interest by the unindicted co-conspirators.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby Henry Vilas » Wed Mar 02, 2016 7:01 pm

What is this all about?

Months before the announcement that Madison's Oscar Mayer headquarters would close, the Wisconsin Economic Development Corp. discussed engaging a "high-level" contact at parent company Kraft Heinz about its future plans but was dissuaded from doing so after meeting with a top executive at Wisconsin Manufacturers & Commerce, new records show.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby Zoti Bemba » Thu Mar 03, 2016 6:06 pm

WMC protests! And in the process demonstrates exactly what's wrong with the WI GOP's approach to economic development:

"The story is a stretch of the truth to say the least and conveys a bias toward WMC and the WEDC that is palpable. We all know the difference between cheese and hot dogs. We all know the difference between Beaver Dam and Madison. But apparently the Wisconsin State Journal doesn't," said WMC president and CEO Kurt Bauer.

http://host.madison.com/ct/news/local/govt-and-politics/madison-democrats-wedc-should-have-done-more-to-keep-kraft/article_917dc0d1-6694-59f6-a0a3-2e1cab07d9f3.html


'Cause you know with these guys it could never be about cheese and hot dogs or Beaver Dam and Madison. Nope! Once they know their cheese isn't threatened all interest in doing anything or thinking about the broader picture and wider implications comes to a dead stop. Those hot dogs will just have to look after their own darned selves!

Hence our ridiculously compartmentalized, winners-and-losers, divide-and-conquer economy, which makes us all losers in the end.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby Henry Vilas » Tue Mar 08, 2016 1:47 pm

I thought Walker said his tax reforms for corporations will pay out in business success, job growth and ultimately more tax revenue down the road. The WEDC was suppose to be part of that plan. They gave Johnson Controls $1.46 million and then the company laid off 277 workers last year.

Now this:

Auto supplier Johnson Controls struck back at Democratic presidential contender Hillary Clinton's accusations that it is turning its back on the American people after the auto bailout.

The Milwaukee-based company has become the target of criticism over its tax-avoiding corporate inversion plan, in which the company will merge with Tyco International and shift its legal and global headquarters to Tyco's Cork, Ireland, base.

Although the company will maintain its primary operational headquarters in Milwaukee, the deal has drawn the ire of corporate critics as the latest example in a stream of American companies capitalizing on tax loopholes by acquiring foreign companies of similar size and moving their headquarters abroad to reduce their U.S. tax liability.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby Henry Vilas » Wed Apr 20, 2016 8:46 pm

More wasted (taxpayer) money.

A Brown County judge issued an arrest warrant Wednesday for a De Pere businessman whose green technology company owes the state’s job creation agency more than $1.2 million.

The arrest warrant for Ronald Van Den Heuvel is related to a lawsuit to which the Wisconsin Economic Development Corp. is a party. It comes a day after Van Den Heuvel was indicted on unrelated federal bank fraud charges.

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Re: Gov. Walker's WEDC "Loses" over $8 Million in Loans

Postby Henry Vilas » Thu Apr 21, 2016 9:30 pm

The WEDC promises reform.

The Wisconsin Economic Development Corp. is reviewing its job-related tax credit programs because of possible discrepancies between the number of jobs created and the amount of tax credits claimed — nearly $66 million since 2007.


No, friends, no overheating like the tropical fishes.


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