Brotherhood of Maintenance of Way Employees
from striking Amtrak. Clinton invoked the Railway Labor Act to force a 60-day
"cooling off" period and create an emergency board to recommend a settlement in
the contract dispute. According to the United Nations Development Program, the world's seven richest people could end world poverty. Their $80 billion, the UN agency said, could provide access to basic social services and eradicate poverty in nations around the globe. The report also noted that the net wealth of the world's top 10 billionaires is worth 1.5 times the combined national income of the 48 least developed countries.
Cheap Jeep
"It is anything but corporate welfare," said Chrysler vice president W. Frank Fountain.
No, the $232 million tax break the giant automaker will be receiving from the city of Toledo, Ohio, to keep the company from moving out of town is, says Fountain, "an investment on a long-term facility that is going to be providing jobs that will generate tax revenue." Under the agreement reached between the Chrysler Company and Toledo over the summer, Chrysler will get the tax breaks in exchange for upgrading its aging Jeep assembly plant down town and building a new facility nearby. You'd think with this pretty payoff in hand, Chrysler would be obligated to at least hold onto its current employees in Toledo. But in fact, the company plans to reduce the local workforce by about 600 people.
That leaves 4900 Chrysler workers in the city of Toledo, and for each worker, the company gets a $47,000 tax rebate, paid for by the people of Toledo.
Money for Nothing
In the contest for taxpayer handouts, Chrysler beat out the global investment bank Bear Stearns. At a news conference in August, New York City Mayor Rudolph Giuliani and Bear Stearns CEO James E. Cayne announced that the prosperous financial institution would be receiving a $75 million tax break as part of New York City's "corporate retention" program -- about $7700 per existing employee.
Happily for Bear Stearns, the company didn't even have to threaten to leave the City in order to receive this attractive "retention" package -- a fact that Giuliani seemed loathe to reveal. "Bear Stearns is very important to New York City's financial community," explained the Mayor.
The agreement is the 33rd "retention" deal New York City has signed since 1993.
A Global Game
It's become a familiar problem in the U.S.: Cities or states engaging in a bidding war to lure a company to town, deluging perfectly profitable companies with offers of tax breaks and infrastructure improvements -- at the taxpayers' expense, of course.
But now the bidding war has widened. At a recent conference in Paris, a group of trade unionists from around the world discussed the growing problem of global tax competition.
"There is a great worry that tax competition between countries is eroding the tax base almost everywhere," Andreas Botsch, a policy advisor to the group, told the Bureau of National Affairs. The unionists are part of the Trade Union Advisory Committee to the Organization for Economic Cooperation and Development. Together the committee represents 68 million unionized workers from the industrialized nations that make up the OECD.
The unionists agreed that the tax competition is the result of a global bidding war: Countries are trying to lure multinational companies by offering them tax breaks. The net result of this practice, the committee concluded, is to shift more and more of the tax burden onto workers and away from capital in countries around the globe.
More Rich & Poor
Between 1980 and 1995, total tax deductible pay for the nation's top executives rose 182 percent, according to IRS data.*
Tee off
President Clinton broke away from his August vacation on Martha's Vineyard to issue an
executive order to block the Brotherhood of Maintenance of Way Employees
from striking Amtrak. Clinton invoked the Railway Labor Act to force a 60-day
"cooling off" period and create an emergency board to recommend a settlement in
the contract dispute.
Clinton should have stayed on the golf course and left Amtrak workers alone. BMWE, an early endorser of the Labor Party (and a recent affiliate -- see page 7), criticized Clinton's move. The President, said BMWE General Chairman Jed Dodd, was "effectively coming to the aid of Amtrak management and putting our right to strike on hold." Tellingly, Amtrak itself applauded Clinton's intervention.
Photo: ©Michael Kaufman, Impact Visuals
Amtrak wasn't so happy, though, with the recommendation the emergency board issued on Sept. 21: The Board agreed with BMWE that Amtrak workers should get a raise equivalent to what other railworkers got last year. Amtrak rejected the plan, and so now it's back to the waiting room for both company and union. Come Oct. 22, the company will be free to impose its last offer or lock workers out. And workers will -- at last -- be free to strike.
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