Texas: King of Corporate Welfare

The New York Times is running a series of articles about how much money states and localities are spending to induce corporations to locate in their area. Corporations receive more than $80 billion of taxpayer money every year, in the form of cash grants, income tax credits and exemptions, property tax abatements, sales tax breaks and free services.

This is redistribution of wealth on a massive scale, welfare for the wealthy. We spend more on this corporate welfare than we do on food stamps (which was $78 billion last year).

The state with the biggest giveaways is Texas: Texas taxpayers foot $19 billion in annual giveaways to corporations. That's $759 per capita and 51 cents for every dollar of the state budget. By comparison Minnesota is a piker: only $239 million, or $45 per capita and a penny per dollar of the state budget.

Companies like GM, BMW, Mercedes Benz, Twitter, Walmart, Shell Oil and major league sports franchises are the usual recipients of this largesse. But the Times finds that the local governments giving all that money away have no idea how many jobs are actually created and how much they actually benefit.
When Minnesota has done this it hasn't turned out so well. The state gave Northwest Airlines sweetheart deals to relocate call centers and maintenance facilities in the state, only to get screwed after Delta bought them out and moved those jobs out of state. Promises corporations make are rarely kept and consequences for breaking them are even rarer.

Companies that play by the rules, pay their taxes and remain loyal to their home states get the shaft, and wind up paying for state officials to lure competitors into the area. To get the same deals those local companies have to threaten to leave, soliciting other states and localities to bribe them away. It's a cynical game that states can never win as they impoverish themselves.

At the end of the day corporations won't make moves that make no business sense. Companies have to locate where resources, transportation and customers dictate. That means most of the states competing for these companies don't have a chance to win, and they're foolishly wasting their time and money even trying. They're just being used as leverage to squeeze the sweetest deal out of the places where the companies actually need to locate.

This is crony capitalism at its worst. It's government picking winners and losers. It's legal, out-in-the-open bribery and extortion. But worst of all, it's a massive transfer of billions of dollars from middle-income and small-business taxpayers to giant multinational corporations.