Friday, June 4, 2004
Big Four Accounting Firm's PowerPoint Presentation Offers View of Seamy Side of State Tax Incentives
Saturday, June 5, 2004
Following up on Monday's post, Do State Tax Incentives Work?, Ernst & Young's brazen PowerPoint presentation, Turning Your State Government Relations Department from a Money Pit into a Cash Cow, has made it onto the web via the Carolina Journal (a North Carolina-based business publication).
Ernst & Young delivered the PowerPoint presentation at a recent meeting of the State Government Affairs Council, which bills itself as "the premier national association for multi-state government affairs professionals of over 120 major US corporations, trade associations and service providers." Ernst & Young made the pitch to a who's who of leading companies -- Alcoa, Anheuser-Busch, Bank of America, Bayer, BellSouth, Best Buy, Capital One, Coors, Goodyear, Home Depot, MBNA, Microsoft, Nextel, Nissan, Pfizer, Toyota, Verizon, and Wal-Mart.
Ernst & Young acknowledges that taxpayers don't like corporate welfare but suggests ways to "provide government with justification" for giving tax incentives to businesses. A key strategy is to identify "public benefits" while making a threat of dire consequences if the deal is not made. At the same time, the PowerPoint presentation suggests techniques to prevent states from rescinding the tax incentives if the promised public benefits do not materialize.
Ernst & Young holds out the recent Boeing-Washington state deal as the model. Faced with Boeing's threat to move manufacturing jobs out of state (following the relocation of its corporate headquarters to Chicago), Washington ponied up almost $4 billion in tax incentives. Yet, as the Evergreen Freedom Foundation notes, Boeing since has shed more than 4,200 jobs in Washington. But the deal stipulates that "the state shall not suspend, revoke, or require repayment" of the tax incentives, no matter what Boeing does on the jobs front. The deal even requires Washington to "assume the entire defense" for any legal challenge to the $4 billion package, including "all fees, costs and expenses"!
(Thanks to reader Ben Cunningham for the tip.)