Georgia Pacific (a subsidiary of Koch Industries) – an early gift from Wisconsin Department of Revenue?

A confidential source inside the Wisconsin Department of Revenue (DOR) says that Secretary Richard Chandler has intervened in an action against Georgia Pacific to have the action dropped by the Department. Due to confidentiality statutes restricting access to audit information, Badger Democracy was twice denied an open records request seeking comment, denial, or further information by Stephanie Marquis, communications director for the Department of Revenue. An extensive investigation did, however, find the action to be longstanding, and quantified the amount of disputed taxes to be in the millions of dollars.  The very nature of this type of action by the DOR, and the inherent secrecy involved raises serious issues regarding transparency and continued political favoritism by Walker Administration officials. If true, the connection between Koch Industries and Scott Walker continue to cost the state millions in revenue, and hundreds of jobs.

Georgia Pacific (GP)was acquired by Koch Industries in 2005. Even prior to its affiliation with Koch Industries, GP had a reputation for acquiring new properties, “upgrading” technology, busting unions, and downsizing its workforce. A 1999 study Global Timber Titans (see page 11 of the study for Georgia Pacific) by George Draffan for the “Committee on Corporations International Forum on Globalization” cites significant downsizing and wage reduction from 1980 through the mid – 1990s. In addition, GP has had a long history of tax evasion. The company was named number 44 in the Corporate Crime Report’s “Top 100 Corporate Criminals of the 1990s.” The report states:

“Georgia Pacific Corporation pled guilty to federal charges of tax evasion. Federal officials alleged that the company made a false claim of a $24 million charitable contribution deduction on the company’s 1984 federal income tax return. The company agreed to pay a $5 million criminal fine and $16 million to settle civil charges.”

Since GP has been purchased by Koch Industries, none of its financial reports are made public, save for mandatory SEC filings. In 2009, almost immediately after being acquired by Koch, GP received millions of dollars in tax incentives from the state of Wisconsin to “upgrade” technology in their main Green Bay facility. GP then proceeded to lay off 158 workers at its Day Street  facility due to the technology “upgrades.” This “investment” in tax incentives by the state has been heralded by conservative pundits and politicians – but has continued to cost the state revenue and middle class jobs. As of this writing, according to a GP – Wisconsin spokesman, the company only has  29 job openings statewide; and only a handful in the production sector.

A recent report by The Institute for Wisconsin’s Future, reported by the Wisconsin’s 5th Congressional District Democrats states that GP funneled $11 Billion in profits out of the state, to avoid paying taxes; and Koch Industries avoids paying $6 billion in Wisconsin taxes annually. GP needed only stall for time through endless appeals and negotiations until a more favorable political climate enabled them to cut a deal. That opportunity presented itself in the Walker Administration, and Revenue Secretary Chandler – a former corporate lobbyist. GP is now able to move its profits out of the state – profits made using taxpayer-funded infrastructure and incentives to grow their business and corporate revenue.

The greatest crime in this instance, is the continued lack of accountability for companies like Georgia Pacific and Koch imposed by the Legislature in Wisconsin – and the neutering of the Department of Revenue by the current Administration and Legislature. New legislation will make it even more difficult, if not impossible for citizens to know which corporations are and are not paying their taxes – and how much revenue the state is losing because of this continuing political payoff.

Koch Industries has supported Scott Walker to the maximum direct contribution allowed by law – over $43,500. In addition, they have funneled over $2 million into current television ads run by Americans for Prosperity – one of their foundation’s political arms. Georgia Pacific executive management contribute thousands to GOP campaigns nationwide, so it is no wonder they garner favor in the tax laws when the GOP holds power in all branches of State Government.

Because of confidentiality statutes, we may never know the actual amount of money Georgia Pacific will take from the people of Wisconsin. What is known, is that the Department of Revenue under Scott Walker is now “open for business.” Open in a way that will deprive the state of untold millions in revenue because of political favoritism and expediency. The question is – how many children can stay on Badger Care for the amount of money Georgia Pacific is walking away with?

After Scott Walker is recalled, Wisconsin must return to taking care of its people, not the new Robber Barons.

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2 Comments

  1. Any update on this case?

    Reply
    • The information and specifics of this case are all confidential under WI statutes. My source was risking their job by disclosing just this. The amount forgiven to GP by the WI DOR will likely never be known.

      Reply

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