Archive for April, 2012

Subsidy Tracker Now Covers All 50 States

April 25, 2012

No part of the country is safe from the scrutiny of Subsidy Tracker, the Good Jobs First database of economic development subsidy awards. With the addition of data from Nevada and Mississippi, all 50 states and the District of Columbia are now represented in the search engine.

Nevada and Mississippi are present thanks to successful open records requests and the discovery of an obscure report. For Mississippi we have unpublished data from the state’s Workforce Education training program, which reimburses training costs for companies such as Nissan, Tyson’s Food and private prison operators CCA and GEO Group. For Nevada we have unpublished data on the Train Employees Now program as well as data on business tax abatements and sales and use tax abatements that were listed in 2009 report by the state legislature’s fiscal analysis division that just came to our attention.

Our latest batch of additions also includes unpublished data from programs in Connecticut, New York, Oklahoma, Texas and Utah (see below). Subsidy Tracker now contains company-specific data on more than 127,000 subsidy awards from 319 programs throughout the country. The depth of coverage still varies considerably from state to state, so we are continuing our push to obtain unpublished data on more and more subsidy programs.

New programs added

  • Connecticut: Digital Media and Film Tax Credit (FY2009-FY2011)
  • Mississippi: Workforce Education training program (FY2009-FY2011)
  • Nevada: Business Tax Abatement (FY1999-FY2008)
  • Nevada: Sales and Use Tax Abatement (FY1999-FY2008)
  • Nevada: Train Employees Now (Apr2011-Mar2012)
  • New York: Job Development Authority Direct Loan Program (2006-Mar2012)
  • New York: Jobs Now (2006-Mar2012)
  • New York: Manufacturing Assistance Program (2006-Mar2012)
  • Oklahoma: Training for Industry (FY2008-FY2011)
  • Texas: Skills Development Fund (FY2009-FY2011)
  • Utah: Custom Fit Training Program (FY2009-FY2011)

New years added:

  • Hawaii: Enterprise Zones (now 2007 and 2011)
  • Virginia: Special Performance Grants (FY2009-FY2011)

Diebold Pushes Ohio Down the “PIT”

April 24, 2012

The recent announcement that Diebold, Inc. would be laying off hundreds of employees from its Ohio headquarters despite having received massive job retention subsidies designed by the state specifically for its benefit came as little surprise.  (We’ve seen it before with Sears, Dell, Boeing, ad naseum.)  The same day, Good Jobs First released “Paying Taxes to the Boss” a report in which we describe the disquieting economic development practice of states allowing employees’ personal income taxes (PIT) to be leveraged as corporate job subsidies.

Among the 22 programs we analyzed in our report is Ohio’s Job Retention Tax Credit (JRTC), which underwent controversial changes last year under the Kasich administration.  At that time, both American Greetings and Diebold were considering relocating their corporate headquarters out of the state.  In response to this job blackmail, Ohio legislators tweaked the JRTC rules to make the credit refundable for companies with a written offer of subsidies from another state.

In the end, Diebold signed a $55 million subsidy agreement (including $30 million in JRTCs) with the state in exchange for a promise to retain 1,500 workers and construct a new headquarters facility.  The catch?  Diebold employed 1,900 people in Ohio at the time the subsidy agreement was finalized.  One year ago our prescient friends at Plunderbund correctly predicted what would come next – the state would be subsidizing Diebold while the company slashed its workforce.  Last Thursday the company announced its intent to move 200 jobs to India, bringing its total state employment down to approximately 1,550 workers.

Diebold’s reasoning for seeking job subsidies from other states is a perfect example of how PIT-based programs accelerate the race to the bottom.  The company claimed it was unable to compete after its chief rival, NCR Corp. relocated to Georgia with the assistance of the state’s Mega Project Tax Credit, yet another PIT subsidy spending program.  (For descriptions of Georgia’s many personal income tax diversion subsidies, see “Paying Taxes to the Boss.”)

The use of workers’ personal income taxes as corporate giveaways fuels already rampant interstate job piracy.  PIT diversions negate the benefits that economic development projects should have on diminishing state tax revenues.  At this rate, it’s not even helping retain jobs in Ohio.  The Diebold situation is proof of that.  Lawmakers should not need more evidence that this is failed economic development policy.

Unfortunately, its failure to generate real economic development hasn’t stopped more states from adopting this foolhardy practice.  Last year Oregon created the Business Retention and Expansion Program, a subsidy that will allow recipient businesses to receive the taxes of workers as forgiveable loans.

Where Are Workers’ Taxes Actually Going? Report: State Withholding Taxes Increasingly Pay for Corporate Subsidies Rather than Public Services

April 12, 2012

Nearly $700 million a year in state income taxes withheld from worker paychecks in 16 states is being used to provide lavish subsidies to corporations rather than paying for vital public services. These diversions have gone to more than 2,700 companies, including major firms such as Sears, Goldman Sachs and General Electric. Few if any of the affected workers are aware, because no state requires they be informed on their pay stubs.

These are the key findings of Paying Taxes to the Boss: How a Growing Number of States Subsidize Companies with the Withholding Taxes of Workers, a study published today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC. It is available at http://www.goodjobsfirst.org.

“Diversion of personal income tax revenues into subsidies violates how economic development has been defined,” said Good Jobs First Executive Director Greg LeRoy. “States are draining a revenue source that helps many of them address structural deficits.”

Paying Taxes to the Boss traces the rise of 22 subsidy programs derived from personal income taxes (PIT) that together cost about $684 million a year. “These programs are justified in the name of job creation, but they often end up subsidizing companies to move existing jobs from one state to another. In other cases, they go to employers that threaten to move unless they get paid to stay put,” said Philip Mattera, research director of Good Jobs First and principal author of the report.

“We recommend that states seriously consider abolishing PIT-based subsidies. Short of that, we urge Truth in Taxation: that companies be required to disclose the details of how much money is going where on every pay stub of affected workers,”  LeRoy added.

The report examines the following PIT-based subsidy programs:

  • Colorado: Job Growth Incentive Tax Credit
  • Connecticut: Job Creation Tax Credit
  • Georgia: Job Tax Credits
  • Georgia: Research and Development Tax Credit
  • Illinois: Economic Development for a Growing Economy (EDGE) Tax Credit
  • Indiana: Economic Development for a Growing Economy (EDGE) Tax Credit
  • Kansas: Promoting Employment Across Kansas (PEAK) Program
  • Kentucky: Kentucky Business Investment (KBI) Program
  • Kentucky: Kentucky Industrial Revitalization Act (KIRA)
  • Maine: Employment TIF (ETIF)
  • Maine: Shipbuilding Facility Credit
  • Mississippi: Impact Withholding Rebate Program/Existing Industry Withholding Rebate Program
  • Mississippi: Mississippi Advantage Jobs Incentive Program
  • Missouri: Quality Jobs Program
  • Missouri: The Missouri Automotive Manufacturing Jobs Act
  • New Jersey: Business Employment Incentive Program (BEIP)
  • New Mexico: High Wage Jobs Tax Credit
  • North Carolina: Job Development Investment Grants (JDIG)
  • Ohio: Job Creation Tax Credit
  • Ohio: Job Retention Tax Credit
  • South Carolina: Job Development Credits
  • Utah: Economic Development TIF (EDTIF)

Some of the programs have been around since the 1990s, but in recent years more states have enacted them: six of the 22 programs (and portions of others) were enacted since the beginning of 2009.

The programs work in various ways. Some allow employers to immediately retain (and never remit to the state) a large portion of the withholding taxes generated by designated new or retained workers. Some provide cash rebates or grants calculated the same way. Others provide credits against corporate income taxes or other business levies, with the value of those credits based on the withholding taxes of new or retained workers. (Some of these credits are cash-refundable if the credit exceeds the company’s tax liability.)  The share of withholding taxes diverted into subsidies can be as high as 100 percent (such as EDGE tax credits in Illinois and Indiana) and the duration can be as long as 25 years (such as Mississippi’s Withholding Rebates). Twelve programs divert 75 percent or more of withholding, and 18 do so for ten years or longer.

The most expensive program is New Jersey’s BEIP, which in FY2011 approved new grants worth up to $73.2 million over their multi-year terms and disbursed $178 million during the year for previously approved contracts. Among states with subsidy recipient disclosure, those with the largest number of participants in PIT-based programs are: Ohio (567), Kentucky (509), Illinois (315), New Jersey (306) and Indiana (283).

The report also highlights how such programs fuel the “economic war among the states” and “job blackmail.” For example, Kansas gave AMC Entertainment $47 million in PEAK subsidies last year to get the movie theatre chain to move its headquarters from downtown Kansas City, Missouri about 10 miles across the state line to suburban Leawood. In Illinois, Motorola Mobility (now part of Google) last year got state officials to provide $100 million in EDGE tax credits over ten years to keep its headquarters in the Chicago suburb of Libertyville.


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