Thursday, November 16, 2006

Banks' "Fear": Fair or Not?

Today's JSOnline runs an interesting article. But it's not just about the Banks, and it is NOT a black-and-white issue.

Wisconsin bankers have some misgivings about their relationship with Gov. Jim Doyle's administration and the Democrat-controlled state Senate after an election campaign in which they backed the governor's opponent and were portrayed as tax dodgers.

Particularly perturbing to bankers was a television ad run by Doyle supporters - not the Doyle campaign itself - that brought up their use of Nevada subsidiaries as tax shelters.

But it's not just the Banks. IIRC, a manufacturing firm in East-Central Wisconsin and a retailer have also used Nevada subsidiaries to reduce Wisconsin tax liability.

Bankers have been proclaiming their innocence ever since the state Department of Revenue began cracking down in 2003 on the transfer of income-earning bank assets to no-tax states like Nevada. Bankers contend the practice is legal and even had the blessing of state tax collectors - in writing - before Doyle became governor. Banks have been using Nevada subsidiaries for years to shield some of their income from Wisconsin's 7.9% corporate income tax. Before moving assets such as loans and bonds to their Nevada investment subsidiaries, many banks asked for and received letters from the Department of Revenue that they believed served as approval.

Yah. In the case of the manufacturer, it was patents; with the retailer, it was their logo and their "formula" for successful store operations.

"All corporations - everyone - should be paying their fair share. That's what the ad was about," said Michelle McGrorty, [Greater Wisconsin Committee's] executive director. "For me it's just a common sense issue."

Obviously, placing assets in Nevada is not do-able for most of us. Evidently at least a few of the Banks have some reservations, too:

Many banks, hoping to put the issue behind them and avoid future risk, have signed confidential settlements with the Department of Revenue. So far, 175 settlements have generated almost $28 million in back taxes.

As we said, this is not "black-and-white."

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