Monday, May 19, 2014

Your tax dollars “at work”….(part 2)



Last year state and local governments handed about $80 billion in tax breaks and other financial incentives to private companies, in highly competitive efforts to attract “new business operations” and “more jobs.”

There’s really no evidence that these government subsidies to corporations have any enduring positive paybacks—short-term or long-term—for the states and cities involved.

The “industrial development” funding is a high-profile political gimmick in many cases, and in all cases it’s pretty much a bald giveaway to the companies.

Why do taxpayers tolerate this misuse of public funds?

See this report from the Council on Foreign Relations, using New York Times data.

Government officials claim that they’re spending the money to attract new jobs to their jurisdictions, but there’s really no serious accountability for the companies—often the touted job creation never happens, or lasts only a short time.

In case you’re wondering, $80 billion is about 7 per cent of state/local tax revenues, so you can figure that 7 out of every 100 dollars you pay in taxes is being handed over to big and medium-sized companies that are looking for the freebies, like low-interest construction loans, tax forgiveness or land that’s been improved at public expense.

The report mentions: “In many . . . industries, subsidies have less influence on location decisions; manufacturers, in particular, require local networks of suppliers and employees with specialized training. Local governments usually lack the sophistication to negotiate successfully with big companies, so they end up subsidizing businesses that would have invested in the state regardless.”

It’s a good bet that your local Industrial Development Authority is pretty much wasting your money.
  
Your tax dollars "at work"....

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