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Missing the Story
American Journalism Review ^ | March 2013 | David Cay Johnston

Posted on 04/01/2013 6:56:02 PM PDT by Lorianne

In 21 states, companies can make deals to pocket the state income taxes withheld from their workers' paychecks. In effect, these corporations are taxing their workers, making them pay for new equipment or just bonuses for the bosses.

That is because the laws authorizing these deals say that once the taxes are withheld from paychecks, the workers have fulfilled their obligation and the fact that the company gets the money is treated as a separate (and in some states confidential) matter.

Billions of dollars already have been diverted through this stealth mechanism. Unless the practice is stopped, I expect it to eventually be in place in all or nearly all of the other 22 states with an income tax. But news coverage has been spotty to nonexistent.

The shift away from competitive markets to insulating favored companies from the rigors of the marketplace should be one of the most important news stories in America. Yet when my research assistants and I dug through news databases like Nexis and Factiva, we found almost nothing. What was reported by major newspapers, magazines, Web sites and broadcast news organizations about new rules that favor monopolies, duopolies and oligopolies was like scattered dots here and there that no one had connected, even to provide the most rudimentary outline.

But while news reports have missed the connections, Wall Street financial analysts get it. These analysts understand that when competition is absent or minimal, companies can charge higher prices and offer a lower quality of goods and services than they could in a competitive market. There is even a word for legal barriers to competition — moats.

Moats are barriers companies erect, through government laws and regulations, that make it difficult to impossible for competitors to enter the business successfully.

(Excerpt) Read more at ajr.org ...


TOPICS: Business/Economy; Government
KEYWORDS: journalism
A longtime reporter and author says journalists are largely ignoring the way new laws and regulations are enriching big business at the expense of consumers.
1 posted on 04/01/2013 6:56:02 PM PDT by Lorianne
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To: Lorianne
The "taxing the workers" is a bit of a stretch when what you are talking about is a credit. Company withholds $1000 from workers and will deposit that money with the state. The state has a deal with the company to give then a $1000 credit for employing workers, locating in the state, hiring minorities, whatever. State says the two amounts cancel, don't bother sending the check. The workers still get credit for the withholding, right? In this case, the state actually implements an efficiency, namely avoiding two banking transactions.

Rail against the deal-making, fine. But don't get tangled in the accounting weeds.

2 posted on 04/01/2013 7:10:26 PM PDT by NonValueAdded (If you can keep your head when all about you are losing theirs, you've likely misread the situation.)
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To: NonValueAdded

Most factory workers get refunds at the end of the year anyway depending on how they file so they certainly aren’t getting screwed there.

I guess I don’t understand what’s going on here.


3 posted on 04/01/2013 7:13:37 PM PDT by cripplecreek (REMEMBER THE RIVER RAISIN!)
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To: NonValueAdded
The "taxing the workers" is a bit of a stretch when what you are talking about is a credit.

So are you complaining that "tax withheld" on the workers paycheck should have read company kickback charge? What would you prefer it to read? The author is revealing the mechnics of the money transfer as it works, not as how you think it should work. He is making an accurate report in addition to being one of a handful who made the effort to do so.

4 posted on 04/01/2013 7:39:01 PM PDT by LoneRangerMassachusetts (The meek shall not inherit the Earth)
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To: LoneRangerMassachusetts
Are those workers, and I mean specifically only those workers, giving their state income tax withholding to the company and not getting credit for it? I seriously doubt it.

ALL of the state's taxpayers share the cost of that give-away, kickback, or incentive - however you wish to characterize it - and THAT is what the author should be complaining about.

5 posted on 04/01/2013 9:46:24 PM PDT by NonValueAdded (If you can keep your head when all about you are losing theirs, you've likely misread the situation.)
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To: NonValueAdded
ALL of the state's taxpayers share the cost of that give-away, kickback, or incentive - however you wish to characterize it - and THAT is what the author should be complaining about.

For example, if the operation was in Massachusetts, and the company decided to move to New Hampshire (a non income tax state), The workers would cease to be taxed, the company would have no taxes to keep, and Massachusetts taxpayers would see no difference in their withholdings. You fail. It's a direct transfer from worker to company. You are purposely being obtuse.

6 posted on 04/02/2013 7:39:10 AM PDT by LoneRangerMassachusetts (The meek shall not inherit the Earth)
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To: LoneRangerMassachusetts

Obtuse? Well thank you Andy Dufresne.


7 posted on 04/02/2013 11:49:58 AM PDT by NonValueAdded (If you can keep your head when all about you are losing theirs, you've likely misread the situation.)
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