States Need to Stop Giving Subsidies to Corporations

[xchrom]

http://www.commondreams.org/view/2012/12/10-2


Moraine, Ohio was already home to a General Motors plant in 1997 when the company said it was looking for a location to accommodate additional manufacturing — and pushed hard for more incentives. After being told that Moraine was competing with Shreveport, La. and Linden, N.J., for the new work, local officials approved the tax breaks. When news reports revealed that no other towns were actually in discussions with G.M., local officials considered rescinding the deal. G.M. was allowed to keep the incentives after a company official apologized. In 2008, G.M. closed the Moraine facility. (Credit: Mark Lyons for The New York Times)

Corporations are playing states for fools. Across the nation, states are now pouring more than $80 billion in subsidies and tax breaks annually to corporations in a futile and counter-productive effort to retain and attract corporate investments in the name of job creation, as outlined in the outstanding series by Louise Story in the New York Times. This flow of subsidies is failing to generate family-supporting jobs and badly distorting the role of state government in a democracy.

irst, the subsidies are superfluous. Corporate decisions are rarely based on subsidies, as Greg LeRoy shows in The Great Jobs Scam. But corporations have learned that there is no reason to pass up special “incentives,” as subsidies can invariably be easily extorted if they just pit the states against each other in a bidding war.

Second, the ever-growing flood of subsidies is failing to generate jobs, especially those paying family-sustaining wages, with almost 60% of new jobs paying under $13.83% an hour. From 2000 to 2010, major US corporations increased employment by 2.4 million jobs in their overseas subsidiaries, even as they wiped out 2.9 million jobs in America, as the Wall Street Journal reported.

Third, the interstate competition for jobs, by reducing the tax revenues coming from corporations, drains every state of funds needed to make higher education affordable for all, provide good K-12 education, make quality health care available, and hold down taxes for working families.

[marmar]

1. "Corporations are playing states for fools."

And the states are still lining up to be the next court jester. They never learn.

[xchrom]

2. indeed. nt