[Durham INC] Corporate Subsidies—The Good, the Bad, and the Ugly

[bonita green]

Corporate Subsidies—The Good, the Bad, and the Ugly
<https://nonprofitquarterly.org/corporate-subsidies-the-good-the-bad-and-the-ugly/?mc_cid=49848b1041&mc_eid=bbb68d574b>


Every day it seems, local and state officials hold a press conference to
announce that a company is bringing a project to their community. Those
ceremonies tout the alleged benefits of the company’s arrival: the number
of jobs that will be created and the amount of money a company will invest.
But what is too often missing from those announcements are the *costs*: how
much money will the public have to pay the company in return?

Without that vital piece of information, the rest of the discussion is just
noise, for there is no way of knowing whether the per-job cost is a good
investment for the community—or a lousy one.

States and localities across the country give companies corporate tax
breaks, or “incentives” as corporations and some elected officials like to
call them. These tax breaks allow companies to pay little to nothing in
state income, property, or sales taxes. States also woo companies using
non-tax subsidies, like cash grants, workforce training, or free land,
roads, and sewer lines.

In short, corporations are exempted from paying for all the things that
communities value: clean water, paved roads, well-maintained parks, public
safety, and help for people in medical distress.

Such subsidies are significant. It is estimated that annually, state and
local governments spend
<https://www.mercatus.org/system/files/mitchell-targeted-development-mercatus-special-study-v3.pdf>
more
than $95 billion on such deals. Amazon, with profits soaring by 220 percent
in the first year of the pandemic, has received
<https://www.goodjobsfirst.org/amazon-tracker> *at least* $4.2 billion in
public money from states and localities across the country. The company
received $700 million in subsidies in 2021 alone.

Recently, my colleagues and I at Good Jobs First
<https://www.goodjobsfirst.org/>, a nonprofit that monitors corporate
subsidy payments, released a study, *Financial Exposure: Rating the States
on Economic Development Transparency*,
<https://www.goodjobsfirst.org/financialexposure>evaluating the state of
the field’s disclosure. The report represents our sixth publication on this
topic, but our first since 2014.

Have things gotten better or worse? It depends where you live. Eight years
ago, we found that 55 percent of examined subsidy programs provided at
least company names; now, this number stands at 62 percent—a modest
improvement. But that still means that in one-third of state programs,
public monies are being given away with no public disclosure at all, *not
even the name of the company receiving the payments*. Lack of transparency
is a problem as these tax subsidies often come directly out of the city,
state, and even school district budgets.

The ubiquity of corporate tax subsidies puts a lie to the notion that a
“free market” exists in the United States. In fact, it pays to be
connected. It also pays to keep those connections secret—the less the
public knows, the easier it is for politicians and government officials to
funnel resources to favored corporations, and for corporations to extract
cash from communities.

If there is a silver lining to this, it is that communities are
increasingly fighting such subsidies, resulting in policies that require
online disclosure of payments made to individual companies. Sometimes
elected officials to seek more information as they too can be left out of
knowing which corporations are receiving public money. In Nevada, a
combination of those factors pushed the state from having one of the
nation’s worst disclosure ratings in 2014 to the best just eight years
later.
be a kind human
Bonita Green
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