Many employers in nineteen states can now keep state income taxes withheld from paychecks. General Electric, Goldman Sachs and Procter & Gamble have these deals, along with a host of foreign firms from the German computer maker Siemens to the Swedish appliance maker Electrolux and a host of Canadian, European and Japanese banks. In all more than 2,700 companies get to pocket the state income taxes withheld from some of their workers’ paychecks.
…In 2011, three more companies threatened to move out of Illinois. The state paid them off by letting them keep all the taxes withheld from their workers’ paychecks for ten years. The German tire maker Continental will pocket $22 million of its workers’ taxes, about a tenth of what it invested to modernize a tire plant in poverty-stricken southern Illinois, retaining 2,500 jobs and creating 444 more.
Navistar, maker of big diesel trucks for industry and the military, threatened to go to Alabama or maybe Iowa. In return for staying put, Navistar will pocket almost $65 million. The big winner, though, was Motorola Mobility, the cell phone maker. Just for promising not to move out of state and take three thousand jobs with it, Motorola gets to siphon $136 million from the paychecks of its well-paid high-tech workers. As if to make this transaction all the more interesting, Motorola Mobility agreed to be acquired by Google soon after the state made the big tax deal. The Motorola board then paid its CEO, Sanjay Jha, to go away. He received $66 million. Thus, Illinois taxpayers underwrote his golden parachute, which amounted to roughly half the value of the worker taxes flowing to Google.