Hagan and a corporate tax holiday
Kay Hagan, North Carolina’s Democrat Senator, came out today at a press conference pushing her case for why multi-national companies should get a pass on paying a large share of taxes on their overseas earning.
The “Foreign Earnings Reinvestment Act” being co-sponsored by Hagan would slash the corporate tax rate for U.S.-based companies on overseas earnings from 35 percent to 8.75 percent. Then, if companies promised to create jobs, they could get a further break and only pay 5.25 percent in taxes on the money they make in other countries.
Hagan says the bill (which she introduced with former GOP presidential candidate John McCain) will put $1 trillion that’s being trapped abroad into the U.S. economy, which she thinks companies will then use to go out and hire workers. Up to $200 billion of that money comes from N.C. companies, Hagan says.
Critics from both sides of the political spectrum disagree with that, citing a similar 2004 proposal allowed multi-national corporations to mainly buy stock instead of hiring workers or buying new equipment.
Appearing at Hagan’s press conference this morning in favor of the bill were two companies with big Triangle presences, the pharmaceutical clinical research company Quintiles and software company Red Hat.
There will probably be plenty of stories about what the CEOs said at the press conference, but here’s a couple tidbits of what wasn’t talked about – some of the breaks and benefits the corporations have already gotten from public agencies in North Carolina.
Both Red Hat, in Raleigh, and Quintiles have benefited enormously from incubators at public universities – Red Hat from N.C. State University’s technology-focused Centennial Campus and Quintiles from its partnerships with the University of North Carolina at Chapel Hill’s School of Public Health.
Red Hat’s research and development leans on N.C. State University, as Red Hat CEO Jim Whitehurst explains in this YouTube video.
The company also got a nice boost from North Carolina taxpayers earlier this year, when the company was given up to $15 to $18 million in incentives by promising to keep its headquarters in Raleigh, hire 500 more people and not skip town. (The Triangle Business Journal had this nice wrap-up in April of how state officials persuaded Red Hat to stay, including a reference to Red Hat pushing to have N.C. State offer curriculum in open source software, the company’s bread-and-butter).
Over at Quintiles in the Research Triangle Park,Quintiles CEO Dennis Gillings made a 2005 announcement about new clinical research alliance between the company and UNC that would allow for drug trials to be run by the university, with a $600,000 start up grant from Quintiles.
Gillings touched on this in a 2005 press release sent out about the partnership: “Working with UNC is important for Quintiles because it will provide real benefits for our customers and for patients as well, and it also underscores the innovative research going on at UNC,” said Dennis Gillings, Ph.D., Chairman and CEO of Quintiles Transnational. “The clinical research unit will help UNC and Quintiles conduct more clinical trials. Drug development always is working against the clock, and I believe this alliance will help us gain precious days and weeks in getting new medicines to patients.”
In 2008, Gillings and his wife Joan (the couple are now going through a divorce) gave a $50 million gift to rename UNC’s School of Public Health. That raised some questions at the time about whether the business was using the school for its own business purposes, and not the education and charitable mission of the school.
From another TBJ article:
Dr. Dustin Petersen, a master’s student in the School of Public Health, is spearheading a student group that opposes the name change because of what it sees as a lack of transparency and accountability in the way the Gillings money is spent and the influence of Quintiles on campus.
“A lot of things have been done behind closed doors,” Petersen says.
He notes that Lisa LaVange, Paula Stafford, Julie MacMillan, Kathy Graham, John Russell and Dennis and Joan Gillings are all current or former executives at Quintiles and now sit on boards and advisory councils within the school. MacMillan, who spent 16 years at Quintiles, was hired by the school to direct Carolina Public Health Solutions, an entity created to manage the Gillings gift.
Petersen says Quintiles executives in positions of influence at the school can push research toward topics that benefit the company and help train future employees.
“In my mind, Gillings sees this as a business investment,” Petersen says. And, he says, a business mind-set can often conflict with the responsibilities of a public school of public health.
The School of Health did indeed become the UNC Gillings School of Public Health.
At the moment, there’s more than a few people tired of the hold corporations have over the country’s political systems (with thousands camped out in Lower Manhattan as part of Occupy Wall Street, and similar protests popping up all over the country).
Hagan was quoted today in her hometown paper, the Greensboro News & Record, addressing that and said the 30 percent tax break to multi-national corporations could alleviate unemployment, something that should be welcomed by the protesters unified by a general dissatisfaction with how the non-wealthy in the country are faring.
“If they could see this will be going toward employment opportunities … this is really going to help that situation,” Hagan said to the N&R’s Mark Binker.
We’ll have to wait and see if that’s the case, or if there will be a limit to the helping hands large corporations get.