Corporate Welfare Bill Moves Ahead Despite Public Opposition
Brian Balfour
| July 17, 2008
A bill to increase the amount of corporate welfare dollars to be distributed through the Job Development Investment Grant (JDIG) program is heading for passage. SB 2075 was approved by the House on July 16 and heads to the Senate. This in spite of wide public opposition to corporate welfare and the unfair nature of politicians playing favorites by bestowing tax dollars on corporations with the most political clout.
North Carolina voters widely opposed to unfair corporate welfare programs.
- A wide majority of North Carolina voters surveyed oppose the practice of economic incentive packages
- Awarding special breaks and handouts to politically-connected corporations creates an unfair disadvantage to all other businesses
- JDIG and other incentive programs do not create real, sustainable job growth
- JDIG heavily favors already prosperous counties rather than counties struggling to create jobs. 91 percent of 2007 JDIG grant money awarded to recipient companies was directed to the already economically vibrant Tier 3 counties.
SUMMARY: In an election year, politicians would be wise to avoid increasing the widely unpopular practice of corporate welfare. When state government plays favorites in the market economy, those companies – often from out of state - with the best lobbyists are rewarded at the expense of home-grown businesses. Especially harmed are small business owners who are punished with a severe competitive disadvantage as they are forced to compete against large companies being showered with government handouts. Following are reasons why expanding JDIG would be a bad idea:
- Strong public opposition
- Civitas DecisionMaker poll results reveal that an overwhelming 80% of voters said they want North Carolina lawmakers to end the “practice of giving big corporations cash payments taken from the taxes paid by small businesses and average taxpayers.”
- Further, a whopping 76% prefer that North Carolina “lower taxes for all businesses rather than provide cash incentives to a few big businesses” as a method of creating jobs.
- Opposition to corporate welfare schemes comes from both ends of the political spectrum. Note the unified condemnation that both liberal and conservative groups heaped on last session’s Goodyear/Firestone deal.
- Favoritism hurts home-grown businesses
- Handing out special incentives to targeted corporations is an unfair practice that places other businesses at a competitive disadvantage
- Those businesses not receiving tax breaks or handouts will be forced to shoulder a larger share of the tax burden
- Corporate welfare is not an effective job-creation program
- Government handouts divert scarce investment resources away from entrepreneurs who would most efficiently meet consumer needs toward companies more interested in government goodies
- Real, sustainable job growth comes from profitable investment opportunities – not by propping up companies that can not survive without taxpayer subsidies
- JDIG grants have largely ignored economically distressed Tier 1 counties and focused on already prosperous Tier 3 counties.
- According to the Commerce Department’s 2007 JDIG Annual Review, 9 of the 14 grants awarded in 2007 went to Tier 3 counties, while only 2 went to the more needy Tier 1 counties.
- Moreover, 91 percent of 2007 JDIG grant money awarded to recipient companies was directed to the already economically vibrant Tier 3 counties.
- Thus, the JDIG program essentially equates to taxpayers from economically distressed parts of the state subsidizing further business development in the wealthiest parts of the state.
- Commits to even more future spending, placing greater pressure on future budgets
- Specifically, the extra $120 million of JDIG grants over the next twelve years commits the State to spending that will crowd out other priorities. This year’s budget proposal already commits more than $1.2 billion in future capital costs, adding another $120 million in commitments will only further tie the hands of future budget-makers.
