David Cay Johnston has a fascinating article on Tax Analysts, now released from behind a firewall. As he notes:
The fast-increasing use of tax incentives by all 50 states has failed to increase jobs or investment, two respected experts on state tax policy found after reviewing more than 50 years of giveaways.
This year, state government subsidies to corporations, partnerships, and other businesses in New York state alone will total $1.7 billion, triple the giveaways in 2005, according to the new study. That's $235 taken from the average Empire State household this year and redistributed to business owners on the theory that redistribution will create jobs.
During those years, the number of jobs in New York declined, the state's official jobs data website shows. The total number of New Yorkers employed in 2012 was down 175,000, or 2 percent, compared with 2005.
Think of it this way: Over nine years, the state of New York gave businesses roughly $10 billion, or almost $1,400 from each household, in a jobs program that eliminated 175,000 jobs at an average cost of $57,000. And that's just state-level subsidies, not those from industrial development agencies.
In fact, it's worse than that. As David notes:
When combined with many previous reports, the Rubin and Boyd study shows that state and local giveaways to corporations simply redistribute wealth upward without increasing jobs. Their continued existence is a testament to the benefits of being politically connected.
In effect, those tax programs artificially inflate profits while reducing revenue for programs that do add to wealth creation and employment.
Like education and childcare.
I have no doubt that the trend is capable of generalisation in this case. It's one reason why I argue that a lot of tax reliefs simply aren't needed and should be scrapped now.
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The subsidies are “corporate socialism”. Yet again predatory capitalism underpins the issue. The victim this is time is either the City/State/Federal government.
Corruption in society has made capitalism dysfunctional, for the system to work it requires a robust legal framework. This has been eroded by the actions of the financial sector and weak politicians.
Iceland’s approach to the Banksters was the correct one.
I can’t help but think that the next financial crash, which is imminent, will destroy Western civilisation. I’m sure the elite know this and they are busy looting while focussing the attention of their puppets, the polticians, on “re-arranging the deck chairs on the Titanic”.
Richard,
How about a list of your top 10 tax reliefs granted to to big business that ought to be cut, capped, or scrapped, as they serve little social, economic, or productive purpose? I am sure you have done this before but a timely reminder would be very welcome. Whilst writing, and if not too early, all the best for the festive season and a happy and healthy new year to you and yours.
That one is overdue….
I agree
And thanks! Greetings to you too
That’s an amazing finding by Johnston. In 2005 the US unemployment rate was 5% (at least it was in one month). Today the unemployment rate is 7%. Thus we would expect there to be 2% fewer jobs in any particular place.
And Johnston is able to show that 2% fewer jobs shows that investment tax breaks don’t work?
It’s quite remarkable how much he divines from that one number really.
At the very least he finds tax had no impact at all
Which still means it was wasted being spent in this way – because these reliefs are state spending
Catch up Tim
Or at least try
Call-up green giants, scroll-down to tax paid..and..
http://www.accountingschoolguide.com/green-giants/
This one has significant interest!
¨47 percent of total US employment is in the high risk category. These are referred to as to these as jobs at risk — i.e. jobs the authors expect could be automated relatively soon, perhaps over the next decade or two¨
http://www.eldis.org/go/home&id=65902&type=Document#.UqlMcqrk7Rp