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State and local corporate welfare are mind-boggling. Where's the reporting?

ASK THIS | January 08, 2011

Cuts in spending for the poor, the disabled and on education are common as revenues decline in states across America. But little noticed along with the hand-wringing, as David Cay Johnston points out, are enormous benefits being given to rich corporations.

By David Cay Johnston

The states are all busy cutting spending on education, the poor, the disabled and the elderly, but welfare for the richest corporations continues to grow.

Where are the news reports examining these policies?

In struggling Niagara County, near Buffalo, Yahoo is getting tax subsidies and reduced-price electricity equal to $2.1 million for each job at a new server farm.

Verizon, one of the richest companies in America, made an even richer deal in the same county: $3.1 million per job. (The arithmetic: Over 15 years, Verizon is getting $614 million in tax breaks and cut-rate electricity for an estimated 200 jobs.)

State and local government subsidies to business now run $70 billion per year, according to a new book by Prof. Kenneth Thomas of the University of Missouri at St. Louis. I examine his book and other tales of corporate welfare in my column "On the Dole, Corporate Style" at tax.com.
I am confident that Thomas's estimate understates the real level of corporate welfare from state and local governments, for reasons laid out in my column.

We don't know exactly how much is being given away to corporations because many states and local governments hide the data.

But Good Jobs First has a subsidy tracker that makes excellent use of the limited data available and allows you to look for corporate handouts in your area as well as by industry.

These subsidies, as I get into in my column, may help the Chinese military spy on the United States and disrupt its communications system in the event of war between America and China, which the leading Chinese military theorist has said is inevitable. That our tax dollars might subsidize Chinese spying is a further outrage beyond the expansion of our policies of corporate socialism, in which we privatize gains, socialize losses and take from the many to concentrate in the hands of the few.

Reporters, and their editors and producers, should be comparing cuts in benefits to the vulnerable to giveaways to corporations.

And journalists should keep in mind that while a subsidy may – emphasis on that conditional – create benefits in a local area, overall these giveaways destroy national wealth while redistributing upwards.

(Editor’s note: The following was added by David Cay Johnston on Jan. 8:) Here are some questions to ask yourself and the authorities:

1. Which agencies in your area hand out subsidies?
2. Are you on the agenda list for all of them?
3. Do you know what their legal duties and limitations are?
4. Have you examined their budgets? And the qualifications of their leaders? (Many are pure hacks with no knowledge economics, development or anything beyond living well on the taxpayer tab while giving away money.)
5. Do these agencies provide copies of the agreements they make with those they give money to?
6. What, if anything, is redacted (blocked out)?
7. What follow-up reporting is required by the recipients?


Posted by Dictynna
01/16/2011, 01:24 PM

The much-touted jobs that are created by these subsidies are just a cover; the real reason for the popularity of corporate welfare is that it provides opportunities for politicians to curry favor with the wealthy and powerful.

Posted by Jack
02/03/2011, 05:08 PM

Jobs? Who cares about the jobs. The real payoff to the local political leaders comes in the form of:
Rent on the land.
Commission earned on the RE lease
or sale.
New businesses may need insurance with nice commissions.
And there may be a host of other services that the new big player needs and will get from local business leaders.

The jobs are secondary to the deals and commissions to be earned.

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