It is time for an unusual but long overdue revolt by the 150 million tax-with-held taxpayers. I’m not speaking of rates of taxation that the rich and corporations largely avoid because of the gigantic tax escapes, which they grease through Congress. Today I’m hoping to get your dander up by showing how corporatist politicians make you pay for big corporations to come to their corporate welfare-friendly state and make profits.
You’ve been required to subsidize these companies for them to make a profit and you get nothing in return – silent partners pouring money indirectly into big-name corporations. They misleadingly call these subsidies “incentives,” but they are really coerced entitlements.
Before getting into these recent tax breaks, a little history is needed to show that once upon a time, giveaways to these self-styled “capitalists,” were not so easy.
In 1971, the Lockheed corporation was not doing so well. So, its corporate lawyers went to Congress to ask for a $250 million loan guarantee so that banks would lend the company money and have no risk because of Uncle Sam’s backing. The proposal created an uproar on Capitol Hill. Hearings were held and extensive debate on the House and Senate floor dissected all sides of this controversial, hitherto unheard-of special privilege. There was extensive coverage in the press.
The bill eventually passed but not without a strong fight and amendments by its opponents.
Fast forward to today where $250 million is chump change. Do you have any idea of the sum total of outstanding loan guarantees for private businesses passed or authorized by Congress? You don’t? Well, neither do any members of Congress. The data is not collected, though I’ll guess it is over a trillion dollars, including big chunks for unfinished or suspended nuclear power plants. Government guaranteed capitalism.
Congress hasn’t even compiled data on how many of these loan guarantees have been called in by failing or mismanaged corporations.
Besides loan guarantees, there are a blizzard of other forms of corporate welfare at the federal, state and local levels. (See, GoodJobsFirst.org). There are property tax abatements, direct cash subsidies as was extended to grossly mismanaged General Motors (GM) after it went bankrupt to get rid of its creditors and its wrongful injury lawsuits.
There are federal taxpayer-paid research and development (R&D) programs, such as new government medicine research given free to Big Pharma to sell without price restraints, and pioneering R&D breakthrough research for the computer, aerospace, biotech, nanotech and agribusiness industries, to name a few recipients of government giveaways.
Bear in mind that these handouts and bailouts rarely come with any payback conditions. The rare instances are when the feds take stock in companies they rescue. This partial reciprocity occurred in the form of stock from the GM and Chrysler bailout of 2008. When the Treasury Department eventually sold this stock, the revenue did not come close to paying for the bailout.
Now, handouts, bailouts, and other subsidies are given to companies as a matter of mindless routine. New York City Mayor Eric Adams announced the other day that he was going to give the newly approved marijuana retailers about $4 million to help them get started. Hey, delicatessens, fresh fruit and vegetable markets, why not get in line? If there’s tax money for getting people “high,” surely Mayor Adams should have some of your taxpayer cash to advance “nutritional highs”, especially for people in need.
However, it was up to Kathy Hochul, the unelected Governor of New York (as Lt. Governor, she succeeded the resigned Andrew Cuomo last year) to raise the corporate tax break competition to unheard-of jackpot levels. The $10 BILLION tax break for chip-makers to locate in New York state, instead of any other state, was so brazen that the Governor resorted to secrecy and legislative darkness.
As reported in the Albany Times Union, with no prior public exposure, her bill was passed without any public hearing by the state Senate on the final day of its legislative session. The state Assembly whisked it through, also without hearings, at 8:00 am on its last day following 20 continuous hours of voting before adjourning.
The newspaper took note of “sleep-deprived lawmakers who were enduring the grueling schedule.” (Republicans went along in both chambers).
John Kaehny, executive director of Reinvent Albany, told the Times Union: “This is like the ugliest of Albany. In this type of fog, the governor’s office can misinform the Legislature, and do it all at the last second.”
There is no reinventing the Governor. Marinated in avalanches of corporate campaign money for her election bid this November, Hochul is addicted to heavily obligating taxpayers for years, without their knowledge or the informed, open consent of their state representatives. This last point was raised by dissenting state senator Liz Krueger (who should be the state’s Governor).
Earlier this year, Hochul secretly negotiated an $850 million taxpayer subsidy for a new Buffalo Bills stadium. The owners of this NFL team, the Pegula family, is worth according to Forbes, $5.8 billion! She then rammed this entertainment giveaway through the legislature, again without public hearings, as part of the state’s budget.
Hochul is just getting started in her enormous giveaways to the super-rich and greedy. She is the plutocrats’ Governor. Public Defenders are leaving their crucial positions in the state because they are paid so little they can’t meet their living expenses. Kathy Hochul has no interest in raising their salaries and securing their constitutional mission of justice for indigent defendants.
There is something seriously out of control with this reckless corporate welfare-disbursing Governor. She even refuses to meet the press or return calls from civic leaders about her dictatorial giveaways to a very profitable semi-conductor industry.
It gets worse. Every day since 1982, according to corporate tax expert and reform advocate Jim Henry (Follow on Twitter: @submergingmkt), the state is refunding electronically about $40 million every day collected from the financial transaction taxes on Wall Street trades in stocks, derivatives and bonds. This is a miniscule sales tax, (a fraction of one percent) in a state where consumers pay 8 percent sales tax on their purchases of essential goods.
With New York City’s budget shaky and the state budget relying heavily on a one-time burst of federal monies, Hochul is refusing requests by numerous informed state legislators, such as Assemblyman Phil Steck, to simply keep the daily collected transaction tax. No way! She’d rather collect campaign money from her Wall Street contributors.
It’s clearly time for a taxpayers’ revolt. For starters, call Governor Hochul to protest. Her office’s phone number is 518-474-8390 and you can email her via https://www.governor.ny.