America The Corporatocracy: In the U.S., you’re just a taxpayer. It’s apparently not your place to question the wisdom of your betters in government and the corporate world. Bryan from Oklahoma writes; We have felt the effects of big, politically connected businesses ourselves. We are a small 75 person manufacturer of electric submersible pumps for the oilfield in Oklahoma. The business was started in 1985 by my parents for $25K. We have lived, worked, and paid taxes in the state of Oklahoma all of our lives. In 2008 and ‘09, we invested $5 million of our own money to build a new 60,000 square-foot facility and have grown from 30 employees to the current 75 in the same time. Not one penny came from the state or federal government. Earlier this year, our governor announced that from her economic development fund she would be giving $150 million dollars to none other than General Electric. The money will be used by GE to build a research facility to enhance their growing oil services division. Part of that business is electric submersible pump manufacturing. I’m glad to know that I have been working all my life to pay taxes that will be used to enhance the business of my competition. Indeed. This stuff happens all across the country, in red states as well as blue. And it doesn’t do anyone any good. General Motors, for example, sought and received sweetheart tax deals and cash injections starting in 1985, in return for local investment to manufacture the Saturn. Yet, after the economy tanked in 2008, GM closed shop in more than 50 towns and cities, costing taxpayers billions of dollars. The Saturn line was abandoned entirely. GM, of course, got a big federal bailout in 2009. State and local taxpayers got nothing. States, counties and cities fork over more than $80 billion each year in giveaways to big corporations in cash grants and loans, sales tax breaks, income tax credits and exemptions, free services and property tax abatements. The beneficiaries include oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains. The justification for this nonsense is that the incentives attract large companies that hire large numbers of workers. Politicians and corporate leaders promise that new employees will pay taxes and spend money in the local economy. But in practice, these incentives rarely add up. In any case, most of the governments doling out this largesse have no idea whether it’s worth it, because they rarely track how many jobs are created, or whether the jobs would have been created without tax money. For example, Massachusetts in 2008 offered incentives to secure investment by the pharmaceutical firm Shire PLC, which promised 680 new jobs. When all was said and done, the cost to the taxpayer came out to $70,000 for each job created. At that rate, it would take decades to recoup the state’s investment, by which time Shire would probably be long gone — perhaps reincorporated overseas as part of a tax-avoidance strategy. This is fundamentally unjust. State and local governments tax local businesses, then use that tax money to lure outside companies, forcing those local businesses to subsidize their own competition. Investment incentives discriminate against small businesses and recent start-ups by offering money only to companies that can create large numbers of jobs. All this is happening while state governments face steep deficits, cut public services, and raise taxes on residents unlucky enough not to be big corporations. Of course, such corporations have become expert at pitting local officials against one another to get the most lucrative packages. States and cities compete with each other to give away their taxpayers’ money to the big boys. Why do they do it if the returns are so poor? There are three basic reasons. First, we allow our governments to intervene in the economy, picking winners (and thus losers): the free market is nothing of the sort. Second, state and local governments rarely have the knowledge or resources to negotiate with corporations that are often bigger and better equipped than many sovereign nations. Local politicians are desperate to be seen “creating jobs,” as though that were government’s role. Finally, we ordinary citizens are forbidden from challenging any of this. When a group of taxpayers sued after Ohio and the City of Toledo awarded automaker Daimler Chrysler $280 million in the late 1990s, the Supreme Court ruled that we taxpayers don’t have the legal standing to challenge such deals. So, remember: In the U.S., you’re just a taxpayer. It’s apparently not your place to question the wisdom of your betters in government and the corporate world.
Posted on: Sun, 24 Aug 2014 14:37:22 +0000
Trending Topics
Recently Viewed Topics
© 2015