Saturday, December 1, 2012

Suboptimal Subsidies For Suckers

As American corporations continue to collect record profits, let's remember that it's coming at the expense of schools, roads, infrastructure, highways, bridges, and social programs.  In many cases, that's direct loss:  the business world now expects cities, counties and states to give corporations massive tax incentives or they simply walk.  The problem is that taxpayers are now giving $80 billion yearly to corporations in what it in effect massive bribes, as the NY Times investigates.

The Times analyzed more than 150,000 awards and created a database of incentive spending, which is searchable on the newspaper’s Web site. The survey was supplemented by interviews with more than 100 officials in government and business organizations as well as corporate executives and consultants. 

A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States. 

Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors. 

While some jobs have certainly migrated overseas, many companies receiving incentives were not considering leaving the country, according to interviews and incentive data.

And almost a quarter of that comes from one state:  Texas.

The Times analysis shows that Texas awards more incentives, over $19 billion a year, than any other state. Alaska, West Virginia and Nebraska give up the most per resident. 

For many communities, the payouts add up to a substantial chunk of their overall spending, the analysis found. Oklahoma and West Virginia give up amounts equal to about one-third of their budgets, and Maine allocates nearly a fifth. 

In a few states, the cost of incentives is not significant. But several of them have low business taxes — or none at all — which can save companies even more money than tax credits. 

Far and away the most incentive money is spent on manufacturing, about $25.5 billion a year, followed by agriculture. The oil, gas and mining industries come in third, and the film business fourth. Technology is not far behind, as companies like Twitter and Facebook increasingly seek tax breaks and many localities bet on the industry’s long-term viability.

This is what should be the final, paradigm-shattering and myth-shattering moment of the ridiculous notion of the "job creator class".  it should end the myths of the "makers versus takers" too, because every industry sector gets billions a year directly from taxpayers.  It's organized extortion on a national scale.

The next time Rick Perry says Texas can't afford to expand Medicaid for Texas's poor, ask him why his state is giving nearly $20 billion to businesses in taxpayer money every year. 

This is why we can't have nice things:  American corporations are some of the biggest takers on the planent.

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