What my friend Warren Celli calls "gangster-controlled" sell-out "governments" are raising everyone else's taxes while "selling their wares" like corporate whores. This stinks.
Should the FBI investigate? Will the FBI eventually execute a search warrant for all such deals in stinky little corners likeSt. Johns County and question MELISSA GLASGOW, who followed controversial County Administrator-Conman MICHAEL DAVID WANCHICK from Texas?
What do you reckon?
Let’s Stop Government Giveaways to Corporations
By JACK MARKELL
SEPT. 21, 2017
Amazon’s headquarters in Seattle.
Stuart Isett for The New York Times
Amazon recently sent state and city officials across the country scrambling to respond to its announcement that it was its announcement that it was seeking enticements to build a second headquarters, promising 50,000 new jobs and $5 billion in investment to the winning location. Governments are mobilizing to devise lucrative incentive packages. I know how this works, because I spent eight years supporting these types of incentives as the governor of Delaware.
Amazon’s public encouragement of a bidding war highlights a competition that state and local governments engage in every day. I became very familiar with this process: A big business promises thousands, hundreds or even dozens of jobs and waits for offers from mayors and governors eager to demonstrate to voters that they are bringing them jobs. In Delaware, our economic development office, with my full approval, was busy calculating direct subsidies to corporations through grants and tax breaks.
I was as guilty as any elected official at playing this game. But it’s a game that should stop. There’s a better way to compete for business.
A New York Times investigation in 2012 found that states, counties and cities were handing out more than $80 billion a year in incentives to attract and retain companies. Amazon, for example, has already benefited from hundreds of millions of dollars in public subsidies as it expanded its warehouse network around the country, according to a report last year by the Institute for Local Self-Reliance.
The company’s new request for proposals seeks a combination of the types of direct payments that governors and mayors regularly make to businesses: incentives to reduce initial capital costs, relocation and work force grants, tax credits and exemptions, reduction of other fees and assistance with utility costs.
In Delaware, despite some notable failed investments (especially trying to save a closed General Motors factory), government incentives during my tenure resulted in the reopening of a refinery, the near doubling of employment in the state by one of the world’s largest banks and keeping two of the three spinoffs from the Dow/Dupont merger in Delaware. I don’t regret making those investments to keep jobs from going to other states. But it would be better for taxpayers if these kinds of cash incentives could be invested instead in such things as schools and infrastructure.
I don’t blame companies like Amazon for playing the incentives game. They have a responsibility to do their best by their shareholders and workers in a climate where competitors are benefiting from similar payouts. Interestingly, though, the chief executives I worked with as governor were less interested in short-term incentives and more focused on long-term partnerships that would help ensure their success. They viewed these incentives as evidence that state and local officials were committed to their company’s future.
And I don’t blame public officials, either, for their efforts to attract businesses with enticements, since they otherwise would risk losing out on new jobs, the transfer of old ones elsewhere and the bad publicity that could come with abandoning efforts to entice or retain companies. That would be the equivalent of competing with other cities and states with one arm tied behind your back, and like other leaders, I wasn’t going to do that as governor.
The result is a market failure in which neither side is motivated to fix the problem. State and local policy makers can’t unilaterally opt out without potentially negative consequences for their constituents, while businesses have a fiduciary obligation to pursue these short-term direct incentives. Competition for jobs should not be seen to hinge on which government can write the biggest check to an employer but on the kinds of things that officials in Delaware and other states spend so much time on to make their communities places worth living in: the quality of schools, work force development programs, the transportation grid and other infrastructure, and the overall quality of life.
The solution is straightforward: Congress should institute a federal tax of 100 percent on every dollar a business receives in state or local incentives that are directed specifically to that company. This would not include investments in public infrastructure, work force development or other investments that can attract employers while also providing a significant long-term benefit to taxpayers.
This tax would, however, end payouts that go directly to a company’s bottom line and would eliminate the pressure these companies are under to pursue such enticements. I’m talking about incentives like direct grants to a company in exchange for the creation of a specific number of jobs (something we did in Delaware while I was governor) or free or reduced land or the passage of a tax policy tailored specifically to one company.
States would still compete for these jobs — but they would do so in a way that better aligns with the long-term interests of taxpayers and the businesses themselves.
States and municipalities would also retain the ability to institute tax-friendly policies for certain sectors — like small businesses or high-tech firms (Delaware, for example, has instituted one of the most attractive research and development tax credits in the country).
This approach would provide a significant victory for taxpayers. Instead of making direct payments to businesses, states and municipalities would invest in and compete solely based on factors that make the most difference for an area’s economic potential and for a company’s ultimate success, like the abilities of the work force, the excellence of their schools and the quality of life for residents. That is a competition worth having.
Jack Markell, a Democrat, was the governor of Delaware from 2009 until January.
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