Thursday, February 05, 2009

Corporate Welfare Continues Despite Tight Budget

I was reading through some of my past posts and reread that IBM will be receiving $22 million of taxpayer money in their deal to open a new facility in Dubuque.

At a time when Governor is calling for a 6.5% cut in government programs and Democratic Legislators have suggested even deeper cuts, the State of Iowa is continuing to hand out taxpayer money. It seems that in a year where the budget is extremely tight that we wouldn't be handing out millions to companies like IBM.

The Register reported last month that tax breaks are bleeding state revenues dry.

Hundreds of millions of dollars are spent each year on tax incentives and grants for Iowa’s businesses or residents, some of which are depriving the state of revenue, tax reform advocates say.

And legislative leaders - who acknowledge they are facing the greatest financial squeeze since the 1980s farm crisis - say it's time to evaluate and possibly chop some of the incentives.
Unfortunately, the money given to IBM is just another example of the state giving our taxpayer money to just a handful of large companies instead of using it to make Iowa a better state for everyone to live in.

4 comments:

Ben said...

Mike Bluin (I know a favorite of yous) had an interesting quote from an interview with IPR a week or so ago where he talked about how the size of the incentive package it took to get IBM to locate in Debuque compared to similar "developement" projects elsewhere. The IBM deal was actually fairly modest in comparison.

I understand the arguments about no using tax payer dollars to effectively bribe companies in order to locate in your area. The reality is, however, that the "bribes" are legal and if you're not willing to pay there are towns lined up who will. In the long run, the tax revenue and benefits to the local economy will end up paying for the enticement package.

The bigger rat hole we keep throwing money down is the vain effort to try to keep failing manufacturing jobs from relocating out of state.

Ben said...

Correction...the story was on NPR and can be heard here....

http://www.npr.org/templates/story/story.php?storyId=100131293

noneed4thneed said...

I think taxpayer money should be used to attract companies, but instead of writing a check and handing it to them, we should invest the money in education or infrastructure.

For example, money was spent to upgrade fiber optic lines in Marshalltown to attract Emerson to locate a tech facility in town. If Emerson were to leave, then Marshalltown would have access to the fiber optics still.

Another example in Marshalltown is Lennox getting money($5 or $6 million over 5 years) to create jobs and then after the 5 years they laid off hundreds of workers and the company was able to keep the money.

Ben said...

You mean like a partnership with the local community college to train the tech workers needed to staff the IBM site?

Or a "green" renovation of a historic downtown building to make it a cutting edge and environmentally friendly techology center?

Or the 1300 jobs all at substantially above minimum wage, who will be living in, buying in, educating in, and paying taxes in the Dubuque area?

Yes, IBM is getting tax breaks and straight cash to locate in Iowa. The development project, however, includes more then just cash handouts. It the jobs created are far more in line with the "creative class" then the Lennox example you used.