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Did Tom Barrett Bring Ingeteam to Milwaukee?

ingeteamAfter the announcement that Ingeteam had planned to build a plant in Milwaukee, some on the left were quick to credit Mayor Tom Barrett for negotiating the move.  One blogger went as far to say that Barrett has "consistently used every tool and reached out to every corner to help bring jobs" to Wisconsin.  But has Barrett been a champion for small businesses, or is the campaign season bringing out more partisan saber-rattling?

The question may be rhetorical.  Politicians typically don't bring jobs to a state through negotiation because large firms tend to settle on an environment that has business-friendly policies in place.

The Role of Human Capital in Business Location

In economics, human capital is a term used to refer to an individual's education, development of skills, and anything else that increases job productivity.  So when large firms audit prospective places to locate their businesses, they will look at the quality of human capital primarily because it's an investment that quickly translates into an accessible work force, less training, and productive results.

In Milwaukee, for instance, we have a rich history of being the world's machine shop.  Milwaukee is among the elite when it comes to knowledge and experience in building small motors.  This distinction set us apart from 76 other cities in 8 states that Ingeteam had closely examined for location purposes.  In fact, Ingeteam had hired a "site-selection firm" to search out areas that had already possessed a legacy in building motors.  So unless Barrett was responsible for Milwaukee's legacy in motor building, I don't think he can take credit for Ingeteam building a plant in Menomonee Valley.

The Role of Tax Credits in Business Location

Economists also tout the role of tax credits in promoting business investments.  According to economist Irvin Tucker, just as an increase in business taxes will lower a firm's profitability and investment, tax credits or tax cuts for businesses will encourage investments.  Correspondingly, we've learned that Ingeteam was pleased by Wisconsin's new law that provides tax credits in exchange for job creation - an exchange could possibly save Ingeteam up to $4.5 million over 10 years.

Although tax credits provided Ingeteam with an incentive to build in Milwaukee, businesses typically don't hire new workers in order to receive a benefit that represents only a fraction of what it costs to hire.  However, Wisconsin's new law could play a role with firms that are already weighing Milwaukee up against other competitive areas.  So unless Barrett was responsible for the financial policies in Wisconsin that incentivize small businesses, he cannot take credit for this factor either.

Barrett's Fight for against Businesses

Coming full circle to our question: does Tom Barrett champion the cause of small businesses?  To discern the answer, let's take a look at Barrett's history.

  • In March of 2000, Congressman Barrett voted against tax cuts for small businesses that would have provided up to $46 billion in tax relief.  The bill in 2000 included repealing tax increases on businesses and providing greater health care deductions for the self-employed.
  • In May of 2001, Congressman Barrett voted against the "Bush Tax Cuts" that reduced personal income tax rates on small business owners and reduced their Capital Gains taxes as well.  The bill that Tom Barrett voted against in 2001 was created in the midst of a recession and was meant to give small businesses an economic boost during a time of 7% unemployment.
  • In October of 2001, Congressman Barrett voted against a $99 billion "Job Creation and Worker Assistance Act" designed to increase business deductions, reduce Captial Gains taxes, and repeal the Corporate Alternative Minimum Tax.  Again, this bill was created during the 2001 recession when small businesses were sluggish and anemic.
  • In 2002, then gubernatorial candidate Tom Barrett proposed plugging a $2.2 billion budget hole in Wisconsin by repealing "tax exemptions of various kinds".  And although Barrett wouldn't specify which exemptions he would remove, it's fair to say that when Wisconsin has a sizable budget deficit, Barrett sees tax increases as the only viable option
  • And since becoming the Mayor of Milwaukee, Barrett has raised taxes and fees in every one of his budgets proposals, including the last one that raised property taxes by 4.4%.

An Evaluation of Barrett's Record

Just recently in Sheboygan, Barrett said that if he's elected governor, he would push for tax cuts and for other incentives to create jobs.  However, his legislative history runs contrary to his spoken word.  In fact, as a state legislator in the early 90s, Barrett pushed for the largest tax increase in Wisconsin history - a tax increase during a recessionary period when unemployment had peaked at 7.8%.  And as a freshman in Congress in 1993, Barrett voted for the biggest tax increase in federal history.  Notably absent from Barrett's voting record, however, are tax cuts for small businesses.

Barrett does not have a good history of pushing for tax cuts - especially during recessionary periods.  In the recession of 2001, which lasted from March until November, Barrett voted against four different bills that proposed tax cuts.  So when it comes to championing the cause of small businesses, there is no evidence, besides disputable campaign rhetoric, that Barrett is our man.


Comments (12)
  • jpk

    One thing's for certain, Barrett had more to do with bringing these jobs to town than Walker did. You can't really argue with results - but nice try.

  • Matt

    Pretty suspect reasoning, as usual here.

    "Unless Barrett was responsible for Milwaukee's legacy in motor building" Well since that legacy is over a hundred years old I guess this factor that you have manufactured would apply to nobody. So why is it a factor at all?
    Nonetheless, who actually recruited the company?

    "So unless Barrett was responsible for the financial policies in Wisconsin that incentivize small businesses"

    OK, I guess Doyle gets credit for that. Go Democrats, keep up the good work. Which part did Scott Walker support? Oh yeah none, so if the financial policies Walker opposes were significant in drawing the business, I guess we are lucky he's not governor. Let's keep it that way.

    Having inadvertently made the argument to elect democrats, Mr. Rodriguez next suggests that Barrett's votes in 2001 are meaningful in this discussion. To back up his factual claims, Rodriguez links to... a Scott Walker press release.

    That's research! Of course, Aaron has already inadvertently established Walker's inadequacies, so it is odd to cite him as a source. But at least he didn't cite scotty for his conclusion. Alas, he cited nothing else either.

  • Aaron M. Rodriguez

    Matt, I'm not sure where your gripe is.

    First, the point of the article was to illustrate the two largest factors that brings Ingeteam to Wisconsin were manufacturing legacy and financial incentive - neither of which Barrett can claim credit for. This is especially true given his history of opposing small businesses.

    Second, you make a big deal about me linking to Walker's campaign website as if the whole of my research was done though them. I linked to 6 websites as a way to pay tribute to them for their diligence.

    What's not noted is that I read the content of about 15 or more websites (which I did not link to), in order to fact-check the sites I had listed. You see, this is something that I do, which liberal bloggers bother not to, for the purposes of accuracy.

    Now, if you have a problem with my data, then kindly put forth your objections. Because only then can you legitimately quarrel with my research. If you cannot, then nothing else needs to be said.

    The bottom line is that Barrett has a pretty rotten history of voting to tax businesses more, which is exactly the opposite financial policy that draws business firms to Wisconsin to begin with.

  • jpk

    First you claim "manufacturing legacy and financial incentive" brought Ingeteam.

    Nevermind that Barrett and the city econ dev team actively recruits biz and helps coordinate (state) resources to lure biz like Ingeteam to Milw. Walker could engage in these activities too, but doesn't.

    But here's the contradictory part. You completely stray from your original statement and say "voting to tax businesses more, which is exactly the opposite financial policy that draws business firms to Wisconsin to begin with."

    See the contradiction? I do.

    So which is it -- "manufacturing legacy and financial incentive" or tax breaks? Cuz if it's tax breaks, and Barrett is such a huge tax freak, then why/how on earth did Ingeteam come here!?

    And BTW you guys are sounding like sour grapes here. Barrett didn't do anything! WAH!

  • Aaron M. Rodriguez
    Quote:
    First you claim "manufacturing legacy and financial incentive" brought Ingeteam.

    Nevermind that Barrett and the city econ dev team actively recruits biz and helps coordinate (state) resources to lure biz like Ingeteam to Milw.

    What businesses did Barrett recruit that otherwise wouldn't have come here without him?

    Quote:
    Walker could engage in these activities too, but doesn't.

    What makes you think he doesn't? I've been told that Walker was instrumental in bringing GE Medical into the Research Park, which accounts for over 2,000 jobs. Can you dispute this claim?

    Quote:
    But here's the contradictory part. You completely stray from your original statement and say "voting to tax businesses more, which is exactly the opposite financial policy that draws business firms to Wisconsin to begin with."

    See the contradiction? I do.

    So which is it -- "manufacturing legacy and financial incentive" or tax breaks? Cuz if it's tax breaks, and Barrett is such a huge tax freak, then why/how on earth did Ingeteam come here!?

    You're taking a few distinct issues separated by time, place, and political capacity and lumping them together into a confusing mesh.

    First, Barrett is, to use your term, a tax freak as noted by his voting record in Congress. As Mayor of Milwaukee, Barrett does not have the same capacity as a U.S. Legislator to deny tax incentives to small businesses. Sure he can raise property taxes, but he's already done that last year, hasn't he?

    Second, and clearly, Ingeteam had a more attractive cost/benefit ratio for moving to Milwaukee. Although property and sales taxes are higher in Milwaukee than its neighboring cities, Ingeteam believed there was an offsetting factor of a rich manufacturing history in Milwaukee that was more significant in terms of finding an experienced workforce that required far less training. Also, there is another factor of a new state law that reward companies who create jobs, which of course, has nothing to do with Barrett.

    And third, the idea of the article was to imagine Barrett, voting history included, in the office of Governor. He is far more dangerous in the governor's mansion with an anti-business ideology, than he is as a mayor.

    If you believe there is still a contradiction, I will be more than happy to take a look at it. If Barrett has a solid history courting businesses, I would like to know about it. But as for now, his voting record in Congress is a bit disturbing.

  • jpk

    Lots to argue about here. You'd have a great career as a lawyer.

    Overall, I disagree with your facts and logic, even the GE claim. Unfortunately not enough room here to exhaustively go through each point.

    For all your talk, B ain't "anti-business," and you know it. That's just hollow name-calling.

    Bottom line: Barrett helped land Ingeteam (and other Men. Valley biz), and Walker had nothing to do with it. Results are results.

  • Aaron M. Rodriguez
    Quote:
    For all your talk, B ain't "anti-business," and you know it. That's just hollow name-calling.

    Do you believe that refusing to provide tax breaks for small businesses is pro-business? Because Barrett rejected tax-breaks for small businesses 4 times during the 2001 recession. In fact, I'm having a difficult time finding where he has endorsed a blanket tax break for businesses of any kind during his Congressional career.

  • ScottForGov

    jpk and Matt: You do realize that Walker, as county executive, does not have the tools, such as offering tax incentives and TIF districts that a Mayor and Governor has, right? Or do you not get that?

    Doyle and Barrett have been handing out cash like candy lately to create some jobs and good will. It's amazing that they actively work to create a hostile business environment in Wisconsin for years and then,in an election year find these millions of dollars to give away.

    The only things Walker can do is to keep county expenses low, reduce debt, reduce the size of government and keep a check on taxes. He has done all of those things. As Governor, he will have the tools that Doyle SHOULD have been using for years.

  • Aaron M. Rodriguez

    Well said.

  • jpk

    @ScottForGov-
    Actually, Walker does have these tools/resources, but he choses not to use them.

    For example, he can promote guarantees on municipal TIF projects, and help with the bonding. He could also use tax incentives/grants if he wanted to start a County program... but that would mean higher taxes. Etc etc...

    More importantly, first you whine that Walker doesn't have the same toys to play with as the other boys, but then you say you hate those toys anyway.

    Sounds like you're the one who doesn't know what he's talking about.

  • Aaron M. Rodriguez

    JPK,

    Scottforgov is right. Walker's tools are very limited, and therefore, his leverage is reduced when negotiating with businesses.

    You say he can "promote guarantees on municipal TIF projects", but what exactly does it mean that Walker can "promote" projects? The Milwaukee County has one voting member on the TIF board, so he is very limited on offering concrete incentives.

    I think liberals see an opening here. They know that conservatives fare better when it comes to being business friendly. Some of them also know that Barrett has more tools at his disposal, by virtue of being a mayor, to push his weight around with the business community. But even you cannot dispute the fact that Barrett has a rather impressive history of rejecting incentives for small businesses.

    In fact, I believe this issue deserves a more careful look.

  • ScottForGov

    JPK,

    I don't know where you are getting that I don't like these tools. I don't like that Tom Barrett and Jim Doyle have actively worked to scare businesses away for most of their terms, but now that they want something (Jim Doyle's third term) they use them. If tax incentives are good enough for "targeted businesses" wouldn't it be great for ALL businesses?

    Aaron did a good job of shooting down the rest of your comments.

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