In 2014 the Humana Building, the most famous building in Louisville’s skyline, was assessed at less than one percent of its value: just $428,570. How much property tax revenue did the Humana Building generate for our public schools last year? Less than $5900.
The Humana Building’s neighbor is National City Tower, a skyscraper that’s nothing special in architectural terms, which sold for $115 million five years ago. The Humana Building is worth more than that. A lot more. If the PVA applied a large discount and assessed the building’s value at just $100 million, Humana’s tax bill would be $1.4 million. A smaller discount and a $120 million assessment would have generated $1.6 million in tax revenue. Instead, a mind-boggling, 99-percent discount on a $120 million property means the Humana Building’s 2014 tax bill won’t even cover the cost of a ten-year-old Toyota Corolla.
From the Jefferson County Sheriff’s Office website:
National City Tower at 101 South Fifth Street, across the street from the Humana Building, was assessed at $92.6 million after a 20% discount on the $115 million 2010 purchase price. It generated almost $1.3 million in tax revenue or 220 times Humana’s tax bill. The tower was sold in February 2015 for over $127 million and should generate about $1.74 million in revenue this year if the PVA doesn’t discount its assessment. Again.
Here is the assessment history for the Humana Building since 2006. Look at that assessment for 2006: $317,310.
In 2008 a simple commercial computer reassessment saved Humana a bundle. With a few keystrokes, millions in property tax revenue vanished into thin air for three years – 2008, 2009, and 2010. The Jefferson County Board of Education raised property taxes in 2008, 2009 and 2010. Quite a coincidence.
Time for reassessments in 2011 and the “Taxpayer’s Opinion of Value” was $540,590: The local PVA board agreed with the “taxpayer” and approved another 3-year discount for 2011, 2012 and 2013. And the Jefferson County Board of Education raised property taxes in 2011, 2012 and 2013.
Fun facts: Humana’s profits in were $1.23 billion in 2013 and $1.22 billion in 2012.
In 2013 David Jones, Jr., Humana board member, Humana “significant stockholder”, former Humana CEO, son of Humana founder, and illegal member of the Jefferson County Board of Education revived a property tax rate increase that the board voted down. He proposed a property tax increase at a lower rate which passed 4-3 and he has repeatedly stated in the media that he was the swing vote. It was the sixth increase inflicted on homeowners in as many years.
A few weeks after the tax rate increase was approved Jones exercised 2,500 stock options and promptly unloaded them. He made more in one day (about $175,000) than most Louisvillians make in a year or two or five years which probably contributes to his pathological indifference to the tax-related complaints of poor and middle-class homeowners and supports his belief that (a) property tax increases aren’t really a big deal and (b) property tax increases aren’t really a big deal.
November’s sell-off was worth $1,045,000.
On August 30th, Jones had this to say on his education blog:
When the Jefferson County Board of Education voted on August 12 to increase local property taxes by 1.4% to fund operation of our public schools, we asked JCPS to work with less than its requested 3.1% increase. Mine was one of four votes against the Superintendent’s initial request, but I then proposed and became the swing vote in favor of the lesser increase. I know that raising taxes is rarely popular, so I think it’s important to explain my rationale.
He justified the increase by blaming rural Kentucky counties that are mooching off Jefferson County’s wealth through redistribution of tax dollars. He griped about other gripes but the complaint about moochers was particularly galling since so much of Humana’s revenue depends on taxpayer-funded social programs like Medicare, Medicaid and TRICARE. My interpretation: Redistribution of wealth schemes fueling Humana’s annual $1.1 billion profit and Jones’s million-dollar stock sales are good; redistribution of wealth schemes for educating poor, rural schoolchildren are bad.
Here is an excerpt from Jones’s post titled Taxes and School Funding: What’s Really Going On – the bold is mine:
“Hard realities” of education finance
In preparing to vote on the local tax rate, these beliefs ran into some hard realities of education finance – and I’ve learned a lot. Realities include millions in recent state and federal cuts to JCPS funding, and the structure of Kentucky education finance, which depends in large part on redistributing taxes from wealthy counties like Jefferson and Fayette to our smaller neighbors. (State and federal funding has provided about one-third of recent JCPS budgets, versus up to 80% for smaller counties.) While shifts in outside funding are beyond Louisville’s control, they influence the funding we must raise locally.
Also in his blog, Jones implores legislators to stop using Jefferson County taxes to fund rural schools:
We need to push the Jefferson County delegation in Frankfort to prevent legislators from draining Louisville’s coffers through state cuts that force us to fund rural areas.
Many rural schools outperform Louisville’s schools which means the return on academic investment is better in coal country than in the big city. Well done, rural schoolchildren. Enjoy it while you can, kids, because there’s room for only one property tax deadbeat in this state and that’s Humana.
On January 1, 2014, just five months after Jones raised our taxes and bloviated on his blog about Jefferson County’s property tax problem, a PVA-approved 21% assessment discount on the Humana Building went into effect in addition to the long-standing 99% assessment discount. The Humana Building’s property value decreased from $540,590 to $428, 570.
Humana received a 21% property assessment discount last year while Jefferson County property owners were hit with a 21% property tax increase over the past ten years.
Humana received a 21% property assessment discount last year while each of its directors received a 24% raise in annual cash compensation from $85,000 to $105,000.
Humana received a 21% property assessment discount last year while its directors received an 11% increase of common stock compensation from $140,000 to %155,000 per year. (View Humana’s SEC details here.)
Kentucky’s corporate tax rate is 6%. Humana’s profits last year were $1.1 billion which could have generated $66 million in corporate taxes for Kentucky. And $72 million in 2013. And $72 million in 2012. But it was not to be.
According to the Kentucky tax code, insurance companies receive a break on Kentucky’s 6% corporate tax which amounts to government-endorsed economic larceny on this very, very poor state.
Page 5 of the 2014 Kentucky Corporation Income Tax Return says this:
Looks like a pretty good deal, right? Wrong. That isn’t good enough for Humana because it’s incorporated in Delaware. So are General Electric, Ford, Yum! Brands and Kindred. Three of those companies have headquarters right here in Louisville. None of them are incorporated in Kentucky. Shame on all of them.
In these troubled economic times, when many states are desperate for tax dollars, Delaware stands out in sharp relief. The First State, land of DuPont, broiler chickens and, as it happens, Vice President Joseph R. Biden Jr., increasingly resembles a freewheeling offshore haven, right on America’s shores. Officials in other states complain that Delaware’s cozy corporate setup robs their states of billions of tax dollars. Officials in the Cayman Islands, a favorite Caribbean haunt of secretive hedge funds, say Delaware is today playing faster and looser than the offshore jurisdictions that raise hackles in Washington. – “How Delaware Thrives as a Corporate Tax Haven”, New York Times, June 30, 2012
Here’s Humana’s 8-K filing from June 8, when they went public about a quiet period after exploring a possible sale in May:
Humana as a Delaware corporation is nothing new. It’s been incorporated in Delaware for a very long time.
Profits are more important than property taxes. Profits are more important than public schools. Profits are more important than people. Is Humana Louisville’s crummiest corporate citizen? Sure, it is.
Whoever picked the name “Humana” for the health insurance giant had a great sense of humor. The word suggests a company engaged in humanitarian pursuits, or at least one with a priority on human beings. Had the marketing genius in charge of picking a name for the corporation been more honest, he would have called it “Profita,” in recognition of its main concern.
Indeed, Humana isn’t shy about revealing its profits-over-people philosophy.
“It is important to note if we have to choose between achieving our membership goals and achieving profitability goals, profits will win every time,” CEO Michael McCallister said in 2003. – “Humana: Profits Over People,” Peter Dreier, E.P Clapp Distinguished Professor of Politics, Occidental College