You've all read the headlines, heard the stories. Some big company promises to build a big factory or store or warehouse, promising lots...
“The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation”
by Greg LeRoy
Berrett-Koehler, 290 pp., $24.95
You’ve all read the headlines, heard the stories. Some big company promises to build a big factory or store or warehouse, promising lots of new jobs; or else it threatens to move or close a facility it already has. The decision will depend upon whether state and local governments can improve their “business climate” — by providing tax breaks, free roads or services, or even direct cash subsidies.
Around here, two of the best-known examples cited in “The Great American Jobs Scam” involve Boeing. It held a public auction for a new home office, a competition to which Seattle was expressly not invited. Then it staged a bigger, wider-strewn “war among the states” (as described by this book’s author, Greg LeRoy) for the right to host the 787 “Dreamliner” assembly line. Washington state “won” that contest, for a mere $3.2 billion in discounted and deferred taxes and other benefits.
LeRoy, who runs the public watchdog group Good Jobs First, wrote about such so-called “corporate welfare” schemes 11 years ago in the book “No More Candy Store.” Since then, he now claims, companies have gotten even more thorough at squeezing every last cent out of taxes and public fees.
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The companies, LeRoy claims, might shave a few percentage points off their building and operating expenses, but the localities lose cash they desperately need for roads, schools, health care and other vital services. The new projects are often situated on the outer edges of suburban sprawl, hurting urban economies and increasing America’s dependence on foreign oil. And the jobs “created” by these deals are often low-paying, or are simply scavenged from other cities and states, or soon disappear when these companies move again, often overseas.
The end result of what LeRoy calls “corporate tax dodging” and other policies: The poor and middle class have to pay for a bigger share of public needs, while the rich pay less. In Washington state alone, he alleges, “families making an average of just $9,600 in 2002 paid a whopping 17.6 percent of their income in state and local taxes, while families in the top 1 percent income bracket paid just 3.1 percent.”
LeRoy’s new book is a brisk and breezy tour through these sweetheart deals. It includes enough examples to outrage free-market conservatives and anti-corporate liberals alike.
He rushes through some of these cases with a “Did you hear the one about … ” anecdotal feel. We hear about a mall in one of St. Louis’ wealthiest suburbs that got itself declared a “blight” zone to help attract a Nordstrom store; and about the call-center operator that keeps moving its facilities from state to state, ringing up the tax breaks just before the layoffs; and about the consulting firms that reap millions in commissions for every subsidized corporate move they broker.
And, as you might expect, he dislikes Wal-Mart — and he particularly hates subsidized sports stadiums.
LeRoy offers a long list of policy recommendations at the end, exhorting politicians to pursue “reinvestment in skills and infrastructure, not more corporate disinvestment by tax dodging … they are wasteful handouts we can no longer afford.”
A less contentious conclusion might be to simply note that America’s corporate leaders got their power by being master persuaders and aggressive deal-makers, and that America’s political leaders should bargain just as assertively, but on our behalf.