The new Civil War

Tax breaks for corporations are about to tear us in half

Bye-bye, Houston Oilers. Used to luv ya, Blue.
Lost 'em to Nashville, Tenn., for a $292 million state-of-the-art stadium with 82 luxury suites, 9,600 premier "club seats" and 42,700 season tickets--plus a $28 million "relocation fee" and other goodies. Break Bum Phillips' heart. Rams, Raiders, Browns--same story.

Now if all these sports teams puttin' they selves in U-Hauls and movin' across the country were just being sold from one owner to another, that'd be their own bidness. But the citizens of Nashville have to pony up $143.6 million to pay for stadium construction, and the Tennessee Legislature has to put up another $79.3 million of the public's money.

Bon-voyaging sports teams are merely the most visible tip of a vastly destructive economic iceberg known as The War Between the States. The public's money is being thrown at private corporations all the time--in the name of "economic development" and "job preservation."

In the Bartlett-and-Steele book America: Who Really Pays the Taxes, B&S observe: "The state and local governments are offering ever larger tax breaks and other incentives to attract or keep companies and jobs. The manic bidding has come to resemble the scramble among professional sports franchises that compete...for the latest hot prospect. Except that in this case, the states and cities are giving away tax dollars. The result is a continuing erosion of corporate tax collections--with you making up the lost revenue in either higher taxes or reduced programs and services, such as shuttered libraries. And corporations, like professional athletes, have become adept at playing the game."

In the game called "whipsawing," several states compete for a new factory or new company headquarters, and then it's a race to the bottom, with the bidding going beyond all proportion to possible benefits.

From 1961 to 1991, the cost of state and local governments grew astronomically (while all the resentment for growth in government got channeled at the feds). According to Bartlett and Steele, the cost of state and local governments was spread disproportionately; state sales tax receipts, paid mostly by the poor and middle classes, increased at almost twice the rate of corporate taxes, while state income taxes went up at about four times the rate of corporate taxes.

The race to give away tax dollars to corporations, which can often get their tax bills cut just by threatening to move, has reached such a frantic pace that last year the Grassroots Policy Project put out a list of the "Terrible Ten Candy Store Deals."

Now we're talking big-time corporate welfare. Exxon may have set a new all-time record by trying to get Baton Rouge, La., to grant $14.4 million in tax abatements for a total permanent job increase of exactly one job. Alabama recently distinguished itself by giving Mercedes-Benz aid worth $253 million--an estimated $170,000 per job. You know any Alabamans who think their money should be subsidizing Mercedes-Benz?

The War Between the States is not a new phenomenon, but it has escalated so dramatically that it is now ripping at the economy. Many of the corporations so handsomely rewarded for either going or staying then proceed to cut jobs right and left. Three million jobs have been lost during the past seven years to downsizing and mergers, according to The Wall Street Journal. The report "No More Candy Store," put out by the Federation for Industrial Retention and Renewal and the Grassroots Policy Project, reports: "The U.S. job market has remained remarkably soft, with more than 2 million Americans being permanently dislocated annually, even in recovery years, twice previous rates."

The problem is about to make yet another quantum leap as the Republican folly of "devolution" dawns on a dark new day. When states are given more power over how to set their own Medicare, Medicaid, and other rates, the race to the bottom will go even faster. The ever-useful Neal R. Peirce, who has the happy faculty of concentrating on solutions rather than problems, reports that economists believe the solution is to use the commerce clause of the Constitution to end economic war between the states by making a finding that these tax subsidies affect interstate commerce. States giving targeted subsidies and tax breaks could be threatened with loss of tax-exempt status for their public debt or loss of federal-aid funds--if, of course, the Republicans believed in federal government at all.

One irony in all this is that while the states give away billions in tax breaks to corporations, thus making all aspects of public life poorer and shoddier, many studies show that the real reason corporate executives finally choose one location over another is quality of life--good schools, parks, libraries, and clean water. That's precisely what is being destroyed by the giveaways.

Molly Ivins is a columnist for the Fort Worth Star-Telegram. Copyright ©1995 Creators Syndicate Inc.

 
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