business, there is no question that Texaco, Mobil, Chevron, and American benefited from tax breaks. But many of those breaks were in place before tax abatements were agreed upon by Golden Triangle taxing entities. Prior to 1976, the city of Port Arthur had contractual agreements with several plants which called for a flat fee to be paid to the city, according to Roland Beiber, chief tax appraiser for Jefferson County. Charles Norwood, Port Neches city manager, reports that his city, for at least the past eleven years, has granted Texaco a 25 percent discount before the tax rate is applied. Port Neches, at the present tax rate and appraisal values, loses $503,000 per year to Texaco, more than $3.5 million in taxes over the seven year period established by the contract with the oil company. In July of this year, the Port NechesGroves Independent School District granted Texaco tax abatements on three projects totaling $19 million. These abatements will cost the school district over $300,000 per year, $1.5 million during the five year contractual agreement. With savings of $5 million in Port Neches alone, Texaco plans to create about 30 permanent jobs. Port Arthur’s city government and school district currently have similar arrangements with Texaco. How much new industry has been attracted to the Golden Triangle through wage cuts and tax abatements? None, unless expansion and maintenance of existing plants is considered. Maintenance would have continued regardless of tax abatements. And all tax abatements have been granted to large multi-national companies that have been in the Triangle for years. For contributors to the John Gray Institute \(the Institute refuses to divulge ment has helped put in place corporate tax abatements that continue to shift the burden of taxation from companies like Texaco to homeowners and small businesses. Local taxes are, of course, IRS deductible for Texaco and other large corporate interests. Yet, the Golden Triangle bows to the wishes of local corporations represented by the Gray Institute, hoping for more jobs, begging for more industry. Had Texaco, Gulf/Chevron and the rest openly demanded tax breaks, public opposition might have prevented it. But the John Gray Institute is a different thing. Clothed in the neutral colors of academia, masquerading in the name of public welfare, it is infinitely more acceptable. The Corporate for Enterprise Development, a Washington-based research group, recently rated business climates considerably differently than does the Gray Institute. A corporation report claimed, “High-tax, highly regulated and heavily unionized states . . . do best overall.” If so, we in the Golden Triangle urged on by the John Gray Institute are proceeding in the wrong direction. We should be taxing local corporations to the extent law allows, regulating them properly, and unionizing every worker in the area. Until we do, the Golden Triangle, for blue-collar workers, won’t “smell like money.” To roughly quote Big Daddy from Cat on a Hot Tin Roof, “It smells like mendacity.” Weslaco /N JUNE of 1984, a family of migrants let’s call them the Morales family from Roma in the Rio Grande Valley, travelled up to West Texas in search of work. They had waited until school was out so that their five children, ranging in age from 11 to 18, could also work. This is crucial because the family will earn most of its yearly income during the summer. In Levelland, they hear that there’s an employment office outside the town in the tiny community of Pettit. There they are assigned to various farmers to hoe cotton. Although a sign at the employment office says they are entitled to Marc Linder is a Texas Rural Legal Aid attorney who spends his evenings working as a freelance writer. Larry Norton is an attorney who recently worked for TRLA. 12 AUGUST 28, 1987 $3.35 per hour, the agent in the office tells them they will earn only $2.50 an hour because that’s all the farmers can afford. No longer are they hourly “hoehands.” They are independent contractors, small entrepreneurs. They have realized the American dream of becoming their own bosses and unfortunately no longer are covered by federal minimum wage laws. Employers, by declaring their employees independent contractors avoid a number of cumbersome and costly requirements including: employer’s social security tax employer’s federal income tax employer’s state unemployment insurance tax workers compensation premiums statutory minimum wage or overtime payments witholding of social security or income tax collective bargaining ERISA pension benefits safety and health inspections race, sex and age discrimination sanctions for employment of “unauthorized aliens” At the peak of the season all seven members of the Morales family work sometimes up to 14 hours a day, seven days a week, on four or five West Texas farms. Even at $2.50 an hour that amounts to more than $1,200 a week. For a family with a cash income of only $5,000 a year, that seems like a lot of money. And with plenty of other families in the area including illegal aliens out of work, no one can afford to protest that, by paying them 85 cents an hour below minimum wage, the farmers are short-changing them to the tune of $400-500 a week. The story, however, does not end in West Texas. In August the family returns to the Valley in time for their children to begin school. In early 1985 the parents file their tax return. Although they have received no tax documents from the farmers, they scrupulously report all income after all, they will be entitled to an earned income credit. Two years later the IRS weighs in with some proposed changes. The Latest in Employer Scams By Marc Linder and Larry Norton
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