Wisconsin Dropped $25 Million in Tax Breaks on Harley-Davidson to Stay Put

09/20/2010 @ 5:10 pm, by Jensen Beeler27 COMMENTS

Through an Enterprise Zone tax credit, the Wisconsin Department of Commerce has handed Harley-Davidson a $25 million tax break for coming to terms with its labor unions in the company’s Tomahawk and Monemonee Falls production facilities. In a move that saw unions cave to Harley-Davidson’s ultimatum, the Bar & Shield brand has disclosed to the SEC that the agreement will save the company $50 million in annual operating expenses, but not before the company writes off a one-time charge of $85 million in restructuring costs, which includes the severance packages for laid off workers.

$70 million of that $85 million restructuring cost is related to one-time termination costs: incentive payments made to employees in order to sway them to ratify the new labor agreements and curtailment charges related to the pension and postretirement health care plans. The remaining $15 million covers the costs incurred by implementing a production process changes for the new labor agreements, which is a fancy way of saying changing the way the Milwaukee company will build motorcycles with its new “casual” employees.

“Together with our employees we are making the changes necessary for us to compete and win in a global marketplace,” said Wandell. “We have worked closely with the state of Wisconsin and we appreciate their efforts to foster a competitive business environment that will help us succeed here long term. As we look to the future, we are confident that Harley-Davidson will be as great going forward as it has been in the past.”

Source: Harley-Davidson

  • Mark

    More corporate welfare, take from the poor (workers) and give to the rich (big Corporations). This is a double kick in the nuts for the HD employees. Not only did they get a pay cut, but now their tax dollars are being pick pocketed by HD as well.
    Lay-off more teachers, cops and hold off on fixing that crumbling bridge, we have to make sure “the corporation” stays profitable. Wisconsin should have insisted that no workers get let go as part of the deal.

  • MTGR

    With the fearless leader of the country convincing everyone that big corporations can’t be allowed to fail at any cost or all life will surely end immediately, it can’t surprise people when individual states start to follow the example.

    Sadly, every time Government sinks our kids futures into one of these nameless, faceless, corporations they just delay the inevitable and prevent free-market economy from self correcting as it is was designed to.

    As with GM and the others, had HD actually left, other industry would have come forward to fill the void and as painful as it might have been for the state in the short term it would have self-corrected in the long term – as opposed to the current ideology which will just keep stacking up interest debts for future generations to deal with instead.

    And, even if HD, GM, et al still exist when my kids kids are trying to repair the economic damage to country, I highly doubt that any of them will spare even a dime to help out that crisis.

  • Tom

    The “fearless” leader is doing no such thing. Its only certain corporations that are too big and actually vital to the future of this nation must be protected. GM is just such a corporation. To let GM die would have been cutting off our nose to spite our face.

    Sure, those delusional types who actually still think there is a “free market” would have felt righteous, but the cost of this would have been too high. The last president who believed in a free market correction was Herbert Hoover and how will did that work out for him and the country?

    A country that does not own its own manufacturing base is a slave. The Chinese know this because they actually study their history – “Open Door Policy”. So yes, other companies would move into the US to take market share and our independence. Smart Americans hate economic slavery to foreigners more than they hate saving a stupidly led company.

    And speaking of stupidity, too many Americans are still clinging to the outdated D-R mindset. Granted, it was the Republican Party starting under Reagan that began to dismantle the Middle Class and America’s future, but the true America-haters figured out it was in their best interests to hedge their bets and to bribe Democrats too. Today, the D-R dance is to amuse the masses while the very rich continue to rig the system in their favor. Civilization is one long series of class wars where the rich most often win. To think otherwise is to engage in a delusion and to ignore history.

    Helping GM was utilitarian and the US will sell back all of its shares to make GM private once again. Harley is not vital to the US economy – Wisconsin? yes. America? no – and this extortion will be reported and it cannot help Harley in the long run. But, perhaps so. union workers buy Coors beer so maybe Harley will win after all.

  • Andrey

    I understand what MTGR is on about but I think he forgets about the MASSIVE cock-ups HD management has been making these last few years as well. And it was the State of Wisconsin not the federal government that gave them the tax break. I think the connection to the “fearless leader” is a huge stretch. I agree that HD should have just packed up and left…..

  • Mark

    Tom, I could not have stated it better myself. You are spot on.

  • Aptimus Prime

    Yey, more payments from the public to America’s union workers. Ripping off the non-union proletariat in order to make sure the union workers can keep their jobs. Whatever you do, Whisky, don’t let Harley restructure their labor.

    Tom, the middle class committed suicide. Credit was made available in the 1980s b/c the Republicans and Volker fixed stagflation with supply side economics and Congress wrote lending laws to make sure everyone could get credit. The middle class went ape. They made the rich richer by abusing consumer credit. Biggest abuse was housing which created problems cost of living index, but instead of letting the stupid old middle-class pay for their mistakes and allowing younger generations to benefit from a market correction, we are borrowing money from future to prop up the dumbest generation of Americans since the mindless people in the roaring 20s.

    This isn’t an R vs. D thing or a union vs. free-labor-market; it’s stupid vs. smart. It’s about the generation of people who’ve perpetrated the greatest generational theft in the history of mankind.

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  • Tom

    The problem with letting the Middle Class pay for its mistake means that we all would be paying worse than we are now. Never underestimate the power of stupid people in large groups. The idiots got bailed out to protect the rest of us. No, it wasn’t a good choice but there were only bad options and death. Under these conditions, bad solutions were a better option than death.

    Now, if we could kill the stupid without hurting the rest of us….now, THAT is an idea that I can get behind.

  • Oscar

    Here’s an idea. How about keeping corporate taxes low, or even eliminating them completely, to not only encourage corporations (and therefore jobs) to stay in the US, but attract even more corporations (and therefore jobs) to the US?

    Yeah, I know, we’d all rather “stick it to the big corporations”.

  • Mark

    Oscar, the problem with our economy is not that the corporations are over taxed. Corporate taxes have been the lowest ever over the last 10 years, based on what they actually pay after all the deductions, not their actual tax rates.
    Our problem is the purchasing power of the middle class (85% of Americans) has steadily declined over the last 30 years, relative to the cost of living. There is simply not enough demand for all the goods and services this economy produces. The only reason this depression didn’t come sooner is that the economy was supported by large amounts of consumer debt. Now, since consumers no longer have access to credit, due to the housing bubble collapse, and consumption is solely dependent upon their wages and savings, the real fraud of 30 years of Reaganomics is exposed. The only people that benefited from these policies are the top 2%, at the expense of everyone else.
    You need to realize that the big corporations together with their right wing corporatist cronies in Washington have been sticking it to the American middle class for the last 30 years, and are now trying to make you feel sorry for them.

  • Sean

    MTGR is right. If a regular person mismanages his finances, doesn’t pay his bills, loses his house, that’s on him and he doesn’t deserve the bleeding heart liberals to help him out.
    Same with Corporations. And yes Tom, free market corrected itself after Hoover and the Great Depression. Sorry if it wasn’t quick enough for you.

  • MTGR

    Re: Tom and Mark.

    I’ll freely admit I am no economist or political expert and might be way off. But there was a time when a corporation so large it could alter the national economy by itself would have been dismantled to protect the national economy rather than saved through billions of tax dollars. (see any history of the oil industry as an example).

    And remember, this is now a global economy, meaning GM is international with a good portion of their spending and profit outside this country too. So tell me, if GM had been allowed to fail and some foreign company had swooped in to snatch up that operation (thus rehiring a good portion of the laid-off employees and saving many of the support organizations that GM allowed to collapse even after Gov cash infusion) – How would that be worse? We could at least have taxed the new owners for a profit rather than sucking out money we don’t currently have to support something that is clearly failing.

    The Government sank enough money into GM to almost have paid out every one of their employees for life, mostly with cash based on loans and debts to other countries. Yes I agree “A country that does not own its own manufacturing base is a slave” but when most of our products are produced outside the country and we also now owe outsiders as backers of the cash we are spending (but don’t actually have) then do we really still own anything or do they?

    Someone has to pay the bill and what the current governments (federal and often state) are doing is the same thing the people and credit lenders of this country did for the last 15 years. Where are we going to turn when the country collapses like the economy did? To the countries we loaned cash with no hope of return or to the ones we are now so vest in they control us more than we control them?

  • Mark

    Sean, what free market? You are delusional if you think this is a free market. A free market doesn’t have a handful of banks controlling 65% of our GDP, or 3 corporations in control of 85% of our food supply, or a handful of media giants owning 85% of our media, or 4 health insurance companies in control of 90% of our health care system.
    Our so called “free market” has become monopoly, corporatist capitalism. Exactly the same conditions that led to the Great Depression.
    It was the free market that eventually corrected itself in the 30’s, but only after the government busted up the monopolies and put regulations in place that restored and preserved the free market. A free market can never exist on it’s own. A corporation will always act in it’s best interests, which is not always in the best interests of the citizens. If left unregulated any “free market” will ultimately become a monopolistic market that will ultimately self destruct.
    A free market works on the basis of competition, this keeps prices fair and quality high, a corporation does not want competition and works very hard at eliminating it’s competition’ good for the corporation, bad for us.
    A market economy does not exist to serve the corporations, it exists to serve and benefit the people. We need to take back control of our government from the corporate interests and return it as the peoples servant to restore our free markets and act in the best interests of the people. Government is not the enemy, we are the government.

  • aptimus prime

    Letting the middle class pay for their mistakes does not lead to societal death. The middle class and the lenders paid very dearly for their mistakes during the roaring 20s, but our country still made it through The Great Depression. With what we know now, we can avoid a Great Depression while still allowing a market correction.

    Gen X has basically committed suicide at the request of the Baby Boomers. The government is stealing from Gen Y and from future unborn generations of people to cover for Gen X. The middle class has never died permanently, and there is reason to believe it will never die permanently. The ruling elites have been trying to kill the artisans and merchants for nearly 1000 years without any measurable success. The middle class simply disappears for a generation or two until they get themselves sorted and they adjust their woefully inadequate behavior and their vapid knowledge base.

    I’m sorry to make it an age thing, but the only universal entitlements in the United States (socialism for the rich in many instances), which account for about 50% of the total Federal budget, are both age specific. Social Security and Medicare are killing our country, but not once has any politician ever suggested that either program be made needs-based (like Medicaid, Welfare, or Unemployment). Apparently, it is political suicide to tell Social Security recipients (including those who don’t need it) that they do not deserve to receive 10% compounding interest on their paltry payroll tax payments.

    Isn’t age-discrimination is unconstitutional? Maybe we should follow our own Constitution every once in a while. If the poor need help, economists have invented the concept of guaranteed minimum income. It works for old people and young people and it is needs-based not universal.

    What has this got to do with H-D? Nothing specific, but all of these problems are symptoms of make-believe fiscal policy. The credit economy was make-believe, but now it has burst. Social Security and Medicare are the current land of make-believe. Instead, of correcting the land of make-believe the government tries to trick young, healthy individuals into a government program that will fund Medicare? I’m about ready to blow my own head off b/c I don’t fancy being tortured until I’m 65.

  • Sid

    I like the Reagan criticisms. Yes, he was strong internationally @ a very vulnerable cold war time, but his domestic policies had compounding consequences.

    He abolished the Fairness Doctrine which paved the way for the media paradigm Mark mentioned. Fox News & MSNBC only perpetuate a gaping divide in the nation. What does this have to do w/the above post & comments? Information is key to anything & the masses are getting buried with rhetoric to a point where they can’t think for themselves….in any industry, in any discussion, in any social class. Makes you wonder if the American way is really a facade. It’s not just infecting politicians & corporations. It’s infecting unions, individuals, & the way of life (“If left unregulated any “free market” will ultimately become a monopolistic market that will ultimately self destruct”).

  • Mike L.

    $25 Mil for turning paying jobs into poverty-level jobs. Sweet.

  • Oscar

    @ Mark says:

    “Oscar, the problem with our economy is not that the corporations are over taxed. Corporate taxes have been the lowest ever over the last 10 years, based on what they actually pay after all the deductions, not their actual tax rates.”

    You’re missing the point. The US has the 2nd highest corporate tax rate in the world – averaging 39% when you account for Federal and State taxes.

    The US is in competition with other countries, just as individual states are in competition for each other. It’s only natural that corporations should choose to move their businesses to places with lower tax rates.

    Furthermore; who do you think actually pays those taxes? YOU DO! Do you really think corporations absorb the cost of compliance with Federal and State taxes and NOT pass them onto consumers?

    In reality, the products we buy in the US are – on average – marked up 23% to cover the cost of corporate taxes.

    Who actually pays the 39% average tax rate in the US? We – the customers – do. And we pay for it agains with jobs lost to countries with lower tax rates (which is almost all of them).

  • Mark

    Oscar, you are wrong. I specifically mentioned that the corporate tax rate is meaningless, the real tax rate is how much they actually end up paying, which is 11% on average , one of the worlds lowest tax rates. Not to mention that many pay no taxes at all. One 5 story office building in the Cayman Islands is home to 18,000 American companies. This is blatant tax dodging by companies that are benefiting from our economy, but are not contributing to it.
    Common, flawed wisdom says that we need to compete with other countries to attract businesses here. The only way to win at that game is to drive wages down to $1 per hour, get rid of all environmental and safety regulations, eliminate paid vacations, sick days, health insurance, social security, workman’s comp etc. Basically, turning the clack back 100 years. This is your solution?? The bottom line is that we can’t, and should not try to compete on those terms. Following that path, a path that many on the right are endorsing will only lead to our destruction, they already have a good start so far.
    The solution is simple. If you want to sell your products in our markets than you need to make it here, or you will have to pay an entry fee for that access.
    We need to eliminate the incentive for companies to outsource their labor and then dump their cheap product back into our country. This will be an incentive for our own American companies to move their manufacturing back here to the us, once the cost benefit is removed.

  • Oscar


    “One 5 story office building in the Cayman Islands is home to 18,000 American companies. This is blatant tax dodging by companies that are benefiting from our economy, but are not contributing to it.”

    Thank you for helping prove me right. Remove corporate taxes and you have no need for corporations to go to the Cayman Islands and employ islanders instead of Americans.

    “The only way to win at that game is to drive wages down to $1 per hour, get rid of all environmental and safety regulations, eliminate paid vacations, sick days, health insurance, social security, workman’s comp etc. Basically, turning the clack back 100 years. This is your solution?? ”

    Provide a quote that demonstrates where I said we need to do any of that.

    If lower corporate tax rates do NOT attract businesses, as you claim, then explain why corporations move their businesses from US states with higher tax rates to those with lower, or no, corporate tax rates.

    Furthermore, you’re still ignoring the fact that YOU end up paying corporate taxes in the form of increased prices.

    Furthermore, you ignore the fact that our current system encourages corruption. High tax rates encourage corporations to bribe politicians to give them tax breaks and/or subsidies, which is exactly how they end up with a lower effective tax rate. That gives politicians more power, which is why they keep corporate tax rates high.

    Lastly, you ignore the cost of compliance for all these taxes. In 2002 Americans spent roughly $194 billion dollars on tax compliance. That’s $0.2/$1 of taxes collected. The majority of that was paid by businesses. And the tax code has only gotten longer and more complex since then. Is it wise to impose such costs on businesses, or would it be wiser to reduce and simplify the corporate tax rate and free up the money spend on compliance to be spent more constructively?

  • Aptimus Prime

    @ Mark

    The problem is not corporations but the income tax. Progressive income tax is a terrible way to tax individuals and corporations. The very idea of paying tax on profit/loss calculated within an arbitrary time period is a flawed idea. Why not pay taxes after each hour, or each day, or week? Income tax violates the ability to pay concept b/c the government is always over/under taxing depending upon the current annual profit/loss trend.

    We’ve built our entire society on an improper way to generate revenue (income tax doesn’t even follow the basic principles of taxation) and our entire understanding of social justice or economic fairness is based upon this inherently flawed income tax system that was not even permissible until Congress amended (suspended imo) the Constitution so that income tax was legal. The problems with the system has led to a perverse code that encourages all kinds of negative behaviors and punishes saving. Not to mention that the very practice of calculating income arbitrarily over time is a convention of the free-market and the private sector. In centuries gone by when nobles taxed the peasants in grain and livestock, maybe it made sense to tax people based upon an annual schedule, but we left the agrarian economy behind quite a while ago.

    Income tax is killing our society, and the people who depend upon it will stop at nothing to make sure it continues whether it’s the CPA lobby, tax attorneys, or the class warfare power brokers.

  • Doug D.

    Ironically, that photo was taken inside the Madison, Wis., police department as Fat Joe paid off the city’s police to dodge sexual assault charges in June.

    But it works good here, too.

  • Tom

    Christ, anytime one starts with the income tax is unconstitutional crap, you lose any and all intellectual credibility. The income tax is the only progressive tax that is actually fair and has squat to do with savings. Americans saved more in the 1950s when the income tax was astronomically higher than it is today. This argument is simply not valid. Highly emotional, Yes. Logical? not in the slightest.

  • As the OP showed, corporations will do anything to pocket money:
    Pay the workers as cheaply as possible,
    Get public money from government giveaways,
    Screw-over workers’ pensions,
    Just get rid of the workers, i.e. union-busting.

    @Sid 09/21/2010 at 10:40 AM
    Ronald Reagan did kill the Fairness Doctrine—wingnuts cannot tolerate fairness. He also destroyed the rules restricting the number of media properties one company could own. This is why there are very very few media companies, which are all very very big.

    What Reagan did was done at the behest of Karl Rove. Karl Rove was also behind Newt Gingrich skirting/breaking the law, by allowing a foreigner, Rupert Murdoch, to own an American broadcast property, Fox News(r). Murdoch now owns the Wall Street Journal, too.

    The lies passed around on the hate-radio circuit, Fox News(r), and a large number of wingnut web sites, are in the last stages of destroying our public discourse. On the other hand, one is responsible for one’s wanting to believe the lies.

    Now Harley Davidson is just another scab labor lackluster product. That really sucks, for America. We used to make good products, until job export hit us!

  • Scooter

    I can believe that they keep throwing money at HD. Harley Davidson does not even try to improve on it aging line of heavy cruisers. It is the same crap every year. I just can’t believe that HD is still in business with the bikes that they produce. Of course if there was a nationwide ban on loud exhaust then HD would be out of business in 6 months. I believe that the only reason anyone buys the dam things in the first place is they like to show off with the loud exhaust. Other than that a HD is worthless. HD is first in line to throw there employees and the union down the sewer. My shadow will never cross the door of a HD dealership.

  • Real World

    85 Million charge off
    700 million loan from Warren Buffet for HD Financial Services
    125 Million loss shutting down Buell
    Who knows how many million HD loss on MV Agusta
    25 Million in tax breaks from Wisconsin
    What was the charge off from shutting down Buell?
    What is the lease cost for the new Buell factory that was a build to suit for Buell that HD still has to pay even though Buell is gone.

    The ship is sinking and no one is at the helm that knows what to do……..

  • Tom

    “I believe that the only reason anyone buys the dam things in the first place is they like to show off with the loud exhaust.”

    Harley Davidson: The most efficient way to convert gasoline into noise, without the side effects of horsepower.

    “The ship is sinking and no one is at the helm that knows what to do……..”

    They say, ‘Full speed ahead!’

  • @Tom: “They say, ‘Full speed ahead!’

    The last time someone recklessly said ‘Full speed ahead!’, the ship hit the Bay Bridge; and San Francisco Bay, and Marin County, ended up with a yucky oil spill. Not that there is a good oil spill.

    If that trillion dollars of bank-bailout money had been spent taking over mortgages, it would, assuming 200k mortgages, have paid off five million mortgages. That money would have trickled up, to the banks. So now, the banks have the cash and the houses!
    The “Change we can believe in” was to put the people who created the mess, in charge of correcting the mess! Is that wrong, or what? (Hint: The answer is not “what“!)

    @MTGR: “But there was a time when a corporation so large it could alter the national economy by itself would have been dismantled to protect the national economy rather than saved through billions of tax dollars. (see any history of the oil industry as an example).
    Yes, there was. The right have dismantled those protections, so that their donors can continue to get everything they desire. That screws everything up, but “I’ve got mine, Jack!” is the order of the day.

    Why should Harley-Davidson, and Wisconsin, be any different? After all, “Everybody else is doing it!, aren’t they? As any mom will say to you, “If everyone else were jumping off the Golden Gate Bridge, then you would jump off, too?