TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, April 28, 2018

How Politicians Use Corporate Welfare For Political Gain

IncentivesNew York Times op-ed:  Do Taxpayers Know They Are Handing Out Billions to Corporations?, by Nathan M. Jensen (University of Texas; author, Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain (Cambridge University Press 2018)):

Every year, states and local governments give economic-development incentives to companies to the tune of between $45 billion and $80 billion. Why such a wide range? It’s not sloppy research; it’s because many of these subsidies are not public. ...

Economic development all across the country is getting less open — and both Democrats and Republicans are doing it. In fact, in many cases, the politicians themselves aren’t even the ones negotiating for the public.

How do communities balance the tremendous opportunity of attracting a world-class company against the taxpayer costs, the pressures on our infrastructure and our struggles of providing affordable housing? ...

Other states are also secretive about economic development. Amazon’s brazen public call for proposals for its second headquarters reveals how far governments will go to keep these secrets. Some cities and states revealed their bids, including New Jersey’s $7 billion taxpayer-funded incentive. But the majority didn’t. In January, when Amazon cut down this list down to 20 locations, the finalists signed nondisclosure agreements to keep the rest of the process secret. Even the cities that were eliminated by Amazon have refused to make their bids public. ...

Rather than revealing the relationship between business and politics, elected officials have used the participation of private interests to shield economic development from their own citizens.

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