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February 14, 2014 admin Uncategorized

2 Dec 2012
Honolulu Star-Advertiser
By Louise Story
New York Times

The cost of the awards is certainly far higher. A full accounting, the Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards.

Billions in tax breaks benefit corporations, not cities, states

In the end, the money that towns across America gave General Motors did not matter.
When the automaker released a list of factories it was closing during bankruptcy three years ago, communities that had considered themselves GM’s business partners were among the targets.

For years, mayors and governors anxious about local jobs had agreed to GM’s demands for cash rewards, free buildings, worker training and lucrative tax breaks. As late as 2007, the company was telling local officials that these sorts of incentives would “further GM’s strong relationship” with them and be a “win/win situation,” according to town council notes from one Michigan community.

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives adding up to billions in taxpayer dollars, according to data compiled by The New York Times.

Some officials, desperate to keep GM, offered more. Ohio was proposing a $56 million deal to save its Moraine plant, and Wisconsin, fighting for its Janesville factory, offered $153 million.

But their overtures were to no avail. GM walked away and, thanks to a federal bailout, is once again profitable. The towns have not been so fortunate, having spent scarce funds in exchange for thousands of jobs that no longer exist.

One township, Ypsilanti, Mich., is suing over the automaker’s departure.

“You can’t just make these promises and throw them around like they’re spare change in the drawer,” said Doug Winters, the township’s attorney.

Yet across the country, companies have been doing just that. And the giveaways are adding up to a gigantic bill for taxpayers.

A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.

The cost of the awards is certainly far higher. A full accounting, the Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know whether the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.

“How can you even talk about rationalizing what you’re doing when you don’t even know what you’re doing?” said Timothy Bartik, an economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.

The Times analyzed more than 150,000 awards and created a database of incentive spending, which is searchable on the newspaper’s website. The survey was supplemented by interviews with more than 100 officials in government and business organizations as well as corporate executives and consultants.

A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.

Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages.

While some jobs have certainly migrated overseas, many companies receiving incentives were not considering leaving the country, according to interviews and incentive data.

Despite their scale, state and local incentives have barely been part of the national debate on the economic crisis. The budget negotiations under way in Washington have not addressed whether the incentives are worth the cost, even though 20 percent of state and local budgets come from federal spending.

Incentives’ also known as bribes

Letters to the Editor, 12/7/12

Honolulu Star Advertiser

Your article “Billions in tax breaks benefit corporations” (Star-Advertiser, Dec. 2) reported on the efforts of U.S. mayors and governors to attract investments, giving billions of taxpayers’ money to corporations in either outright grants or tax breaks. The article repeatedly referred to these gifts as “incentives,” a polite way of saying “bribes.” On the same day, you printed an article titled “Education in China comes at steep cost” that described similar kinds of incentives, where Chinese parents are said to often pay money to school administrators to give preferential treatment for their children. This article repeatedly referred to such payments not as “incentives” but as “bribes” and “corruption.” Yes, corruption is a problem in China, and all Chinese know about it. But in America such payments are camouflaged as incentives, commissions, deals, finders fees and varieties of brokers fees and consultancy fees, leaving the public unaware of the corruption involved.

Oliver Lee

Aina Haina 

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