In a crisis, it’s a tough thing to watch people scramble to survive. And those that already have a lot usually are in the driver’s seat, ready to pit one person against the other. The same is true for states–ever desperate to try to get a few jobs for its citizens (and, need I point out, voters) elected officials are ready to give away the store to corporate leaders, no matter what the price might be.
Per the Financial Times today:
As US states jockey to attract jobs to push down high unemployment rates, companies are benefiting from a host of tax breaks and other government-funded incentives.
But the race to offer sweeteners to corporations is raising questions about whether they are worth the cost.
Maryland is looking at expanding benefits for biotechnology and research and development groups, while Missouri’s legislature is considering a $6m programme to keep jobs from decamping to neighbouring Kansas.
In the New York metropolitan area, competition between New York and New Jersey has generated millions of dollars in subsidies to businesses.
Does this create new jobs? Not really.
“Generally such moves involve just moving jobs around,” said James Parrott, chief economist of the Fiscal Policy Institute. “Companies play one [state] off the other.” He argued that for most businesses, “location is so important that no matter what the subsidy is, it can’t be the decisive factor in where they’re going to locate”.
Essentially, it’s corporate blackmail.
By the way, this is nothing new. Four years ago, I wrote about how companies were lying about jobs created in return for tax breaks given out in New York.
And one of the great corporate scam artists in this “give me a tax break to save jobs” is…surprise…Goldman Sachs, as I wrote five years ago. The leader in the financial debacle in 2008 had a lot of experience under its belt: in 2005, it extorted money from New York, threatening to leave the city unless it received tax breaks and low-interest bonds. It did so in a fairly ugly way.
Using the specter of September 11th as a club, the company pocketed an unbelievable deal: $1.65 billion in low-interest, triple-tax-exempt Liberty Bonds, enabling the firm to save as much as $9 million a year in financing costs, which would save Goldman about $250 million over the life of the bonds. If that wasn’t enough, the city also threw $115 million in sales and utility tax breaks at the company, in return for a commitment to maintain its headquarters in Lower Manhattan and employ more than 9,000 people through 2028; those breaks could rise to as much as $150 million if Goldman adds 4,000 new jobs by 2019.
And, then, came a real beauty: rather than pay those tax breaks back, it set aside $16.5 billion in cash to pay out as bonuses at the end of 2006—an average pay day of $622,000 per worker. Of course, average really is misleading—the top dogs at the company will reap the big windfalls (CEO Lloyd Blankfein was in line to cash a check of up to $50 million), with the support staff probably getting a free Metro Card or maybe a nice holiday gift basket, at best.
These are not new stories. A great organization, Good Jobs First, has been banging this drum for a long time.
But, here we are. A crisis has drawn the piranhas to suck up any dollars at the expense of the people.
This post originally appeared in Working Life on September 26, 2011. Reprinted with permission.
About the Author: Jonathan Tasini is the executive director of Labor Research Association. Tasini ran for the Democratic nomination for the U.S. Senate in New York. For the past 25 years, Jonathan has been a union leader and organizer, a social activist, and a commentator and writer on work, labor and the economy. From 1990 to April 2003, he served as president of the National Writers Union (United Auto Workers Local 1981).He was the lead plaintiff in Tasini vs. The New York Times, the landmark electronic rights case that took on the corporate media’s assault on the rights of thousands of freelance authors.