Most residents of our region need no introduction to Johnson Controls, Inc., the Milwaukee-based corporate behemoth that orchestrated an unpopular school closing plan for the St. Louis County School District back in 2009.
The Fortune 100 company hit the national news recently, however, when it announced its plan to merge with Tyco International in a move designed to save the company at least $150 million annually in U.S. taxes. Under the deal, the company will shift its corporate headquarters from Milwaukee, Wis. to Cork, Ireland, where the corporate tax rates are lower.
It’s a bit of corporate chicanery that’s come to be known as an “inversion” and it’s part of a longstanding pattern by major U.S. companies to avoid paying their taxes.
It’s particularly egregious on the part of Johnson Controls, since so much of their profits are derived from tax dollars. Many public bodies, including school districts, cities, and other governmental entities maintain energy services contracts with Johnson Controls, which are supposed to reduce energy usage in public buildings. Government auditors have, on occasion, questioned the value of such contracts, which are very expensive and usually encompass long-term commitments.
At the same time, Johnson Controls, which also manufactures components for the auto industry, was one of a number of auto suppliers that benefitted, at least indirectly, from the 2009 auto bailout.
You might think a company that derives so much income from the taxpayers wouldn’t mind paying its fair share, but that’s not how many corporate executives view things these days. The concept of loyalty to their country of origin has all but disappeared, and that’s just one of the reasons that more and more of the nation’s income keeps going to those at the top.
When we hear politicians cite all the things that America can no longer afford, like Social Security, a sound infrastructure, good schools, affordable public colleges, health care access for everyone, or lead-free drinking water— it’s because companies like Johnson Controls have opted to evade their tax obligations. Back in 1952, corporations contributed fully a third of total U.S. taxes. Today, at a time of near record corporate profits, it’s less than 10 percent, and that’s the primary reason that America can’t afford the First World standard of living we used to take for granted. Don’t think for a moment that Flint, Michigan, is an aberration— it’s just the tip of the iceberg when it comes to this country’s crumbling infrastructure and short-sighted penny pinching.
It’s not that we aren’t wealthy enough as a nation. It’s just that Washington has sat back for decades while large corporations and the wealthy have shipped more and more of their money overseas to avoid paying their fair share. Indeed, media reports this past fall cited a study by the Tax Policy Institute that revealed that U.S. corporations were stashing $2.1 trillion in profits in offshore tax havens. That represents hundreds of billions in lost tax revenue to the U.S., forcing the rest of us to make up the difference.
Enough is enough. It’s time we tell state lawmakers and the politicians in Washington to start passing laws that put a stop to this kind of behavior. And we can take steps, as well, right here at home. If companies like Johnson Controls won’t play fair with American taxpayers, there’s no way we should stand idly by while our tax dollars pad their profits. Public entities in our region should make sure they aren’t part of the problem. School districts, cities, and any other public entities that do business with Johnson Controls should put their foot down, and tell Johnson Controls to stuff their contracts where the sun doesn’t shine. It’s time we start shaming these corporate deserters and refuse to participate in their fleecing of America.