These Billionaires Make Bank When Taxpayers Subsidize Business
State and local business subsidies are intended to create jobs and promote economic growth, but frequently serve only to enrich billionaires and large corporations.
According to a report released on Tuesday by Good Jobs First, which bills itself as a good-government group, “about one-third of the individuals in the Forbes 400 are linked to 99 taxpayer-subsidized companies, including every one of the 11 wealthiest individuals and all but two of the richest 25,” while 87 companies known for paying extremely low wages also received subsidies
“More than $21 billion in taxpayer dollars have been awarded to these two sets of firms,” the group claims in a press release, adding that the subsidies are “fueling economic inequality by going to companies that are owned in whole or part by billionaires, and to low-wage employers.”
The report was based on data compiled from the group’s “Subsidy Tracker,” a continuously updated database of state and local corporate subsidies, and was limited to subsidies worth $1 million or more. (RELATED: States May Have to Disclose Business Subsidy Costs)
“Inequality has many causes, and now we can say development subsidies are among them,” said Good Jobs First executive director Greg LeRoy. “Subsidies are being awarded to large, profitable companies controlled by billionaires such as Warren Buffet’s Berkshire Hathaway while we have too many communities that really need the help,” he added.
Economic-development subsidies come in many forms, including “business property tax abatements, corporate income tax credits, sales tax exemptions, training grants, infrastructure improvements, and the like” and are generally billed as a way of jumpstarting private development projects.
However, “they are often awarded to profitable, growing companies that do not need tax breaks to finance a project, meaning that the subsidies serve mainly to increase profits.” (RELATED: McAuliffe Sets Record for Business Incentive Deals)
According to the report, the 99 taxpayer-subsidized firms linked to billionaire owners “have been awarded more than $19 billion in cumulative subsidies,” with an average subsidy amount of $196 million.
Moreover, “five of the 99 firms have been awarded more than $1 billion in subsidies, including Intel ($5.9 billion), Nike ($2 billion), Cerner ($1.7 billion), Tesla Motors ($1.3 billion) and Berkshire Hathaway ($1.2 billion).”
The report also identifies 87 “prominent, low-wage companies… that have each been awarded more than $1 million in state and local subsidies, for a total of $3.3 billion.” (RELATED: Misguided Incentives May Contribute to Rising Health Care Costs)
Retailers are the primary beneficiaries in this category, “with 60 firms awarded more than $2.6 billion in subsidies,” while “twelve firms in the hospitality sector account for more than $245 million in subsidies.”
Considering that declining wages for low- and middle-income workers are “a well documented source of inequality,” Good Jobs First says it would be reasonable to expect development subsidies to “help raise living standards for typical families.” Instead, they say, “taxpayer money is being used to expand low-quality employment.”
“Subsidies are certainly not the main cause of growing inequality,” LeRoy points out, “but subsidizing billionaires and low-wage companies is a strong facial connection that our Subsidy Tracker now enables us to make.”
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