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Friday, January 07, 2011

"On the Dole, Corporate Style"

This is from a much longer and more detailed article by David Cay Johnston on the large costs and small benefits of tax giveaways to corporations:

On the Dole, Corporate Style, by David Cay Johnston. Tax.com: ...In 200 packed pages, Prof. Kenneth P. Thomas, a political scientist at the University of Missouri-St. Louis, documents how tax giveaways to big business are growing around the globe, although the Europeans and Canadians seem to be doing a much better job than Americans at controlling the costs of these deals.
"Estimating aggregate state and local subsidies in America is a difficult proposition because of the lack of transparency at all subnational levels of government," Thomas writes. Thomas estimates American state and local government giveaways to business have grown to $70 billion per year. I am confident that his estimate is on the low side...
Canada has had some success in stopping one of the most pernicious problems in American subsidies, namely competition between the provinces to give away the most money to attract investment. But in America, the National Governors Association opposes federal legislation to limit or end the bidding wars, whose only sure winners are the corporations that scoop up tax dollars.
Many states require no reporting on local tax abatements, Thomas noted. Others do not verify figures independently. Some data -- especially discounts on electricity, water, and sewer services -- are often obscured or hidden by the authorities on the grounds that they would disclose proprietary information about the beneficiaries of corporate welfare. ...
It is curious how the government collects and discloses finely detailed data on how much tax money goes to the disabled, the poor, and the elderly, and to educate the young, but when it comes to welfare for big business, it just cannot seem to find the resources to gather and analyze the costs.
Strange, too, that many of these obscured, but gigantic gifts come through the good offices of politicians who pose as champions of the taxpayer and enemies of welfare, or at least of welfare for those who actually need it. ...
That any of this corporate welfare is handed out in America is amazing, given that many states have prohibitions against gifts of taxpayer money to corporations. Many of these provisions were adopted because of scandals over tax dollars being given to corporations during the Gilded Age. ...
New York's Constitution has a ban on gifts of tax dollars to corporations that is simple, straightforward, and utterly ignored. James Ostrowski, a Buffalo lawyer with a libertarian streak, has taken on some of the Buffalo-area corporate giveaways. The courts have not been welcoming, dismissing his cases. But on appeal of one case, only one of four initial defenses for the giveaways remains -- the claim that the government is not giving away tax dollars, but rather entering into a contract to provide jobs in return for tax dollars.
That defense is laughable, but it may just be enough to keep alive the flow of dollars from the pockets of everyone into the coffers of big corporations. If Ostrowski loses, then at least in the Empire State, the socialist redistribution from the many to the few will likely accelerate...

    Posted by on Friday, January 7, 2011 at 01:06 AM in Economics, Taxes | Permalink  Comments (27)


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