I wrote a bit ago about how states are “tightening their belts” by cutting education. You may think that’s fair, since most states have to balance their budgets. The problem is where they are spending money: big corporations. David Cay Johnston has the newest scoop on the tax incentives states give to corporations:
The fast-increasing use of tax incentives by all 50 states has failed to increase jobs or investment, two respected experts on state tax policy found after reviewing more than 50 years of giveaways.
This year, state government subsidies to corporations, partnerships, and other businesses in New York state alone will total $1.7 billion, triple the giveaways in 2005, according to the new study. That’s $235 taken from the average Empire State household this year and redistributed to business owners on the theory that redistribution will create jobs.
During those years, the number of jobs in New York declined, the state’s official jobs data website shows.2 The total number of New Yorkers employed in 2012 was down 175,000, or 2 percent, compared with 2005.
Think of it this way: Over nine years, the state of New York gave businesses roughly $10 billion, or almost $1,400 from each household, in a jobs program that eliminated 175,000 jobs at an average cost of $57,000. And that’s just state-level subsidies, not those from industrial development agencies.
The 143-page study by Marilyn M. Rubin of John Jay College and Donald J. Boyd, former director of the Rockefeller Institute of Government State and Local Government Finance research group, was prepared for the New York State Tax Reform and Fairness Commission created by Gov. Andrew Cuomo (D). But its findings apply to all 50 states, where tax incentives have been growing like weeds since the turn of the millennium.
Corporations force states to compete to get factories. Matthew Yglesias reports on how insane it’s getting:
It’s no secret that big companies with lots of jobs to throw around try to strike good deals with state and local governments in exchange for deigning to locate there. ButBoeing’s wish list for building a 777X factory is extremely ambitious. For example, they would like to build the factory in a city that will pay for the entire building of the factory, with the following three points listed as desirable:
— “Site at no cost, or very low cost, to project.”
— “Facilities at no cost, or significantly reduced cost.”
— “Infrastructure improvements provided by the location.”
That’s a little nutty. If your strategy for attracting the construction of an airplane factory to your town includes footing the entire bill for an airplane factory, then you might as well just launch an airplane manufacturing company. You can read the whole list here. They are ideally looking for a highly skilled yet low-wage workforce at a location with a dedicated railroad spur and a seaport. Plus low taxes!
The balls on these companies. Seriously.