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KC native
06-07-2012, 10:44 PM
I've been bitching about deals like this for years but David Cay Johnston writes a fantastic column about it.

http://blogs.reuters.com/david-cay-johnston/2012/06/01/how-corporate-socialism-destroys/


IRONDEQUOIT, N.Y. — A proposal to spend $250 million of taxpayer money on a retail project here illustrates the damage state and local subsidies do by taking from the many to benefit the already rich few.

Nationwide state and local subsidies for corporations totaled more than $70 billion in 2010, as calculated by Professor Kenneth Thomasof the University of Missouri-St. Louis

In a country of 311 million, that’s $900 taken on average from each family of four in 2010. There are no official figures, but this one is likely conservative because — as documented by Thomas, this column and Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations — these upward redistributions of wealth keep increasing.

In Irondequoit, just outside Rochester, N.Y., and a few miles from where I live, developer Scott Congel wants $250 million in sales taxes to finance rebuilding the Medley Centre mall while adding condominiums and a hotel. Typically local governments issue bonds, which are paid off using sales tax receipts that are diverted from public purposes to the developer’s benefit.

Subsidies for retail businesses are the worst kind of corporate welfare because, as the end of the economic chain, retailing grows only when population and incomes increase. If population or income falls, then subsidies for new projects like Congel’s damage existing businesses, where people would otherwise be spending their money.

The mall, which struggled from the start, was built in 1990 for $140 million in today’s dollars. A Congel associate, Adam Bersin, bought it in 2005 for less than $6 million in today’s dollars. He then persuaded the Monroe County industrial development agency to issue $5.4 million in bonds and then flipped the real estate to Congel in 2007.

Today the mall is empty, its doors sealed, except for a Sears at one end and a Macy’s at the other, each with a handful of customers during my visits.

Congel promised a $260 million project, but five years on nothing is built and Congel is seeking delays in fulfilling promises for which the mall was granted property tax breaks.

That’s how corporate socialism works – taxpayers contribute when the market rejects.

TAXPAYERS’ EXPENSE

Congel has never spoken publicly about his plans for the mall and neither Congel nor any of his representatives, including a lawyer, returned my calls. But la st month hi s office gave a local TV station a statement promising to invest not $260 million but $750 million

My review of construction costs for hotels and condominiums suggests the $750 million figure is wildly inflated, but it may make the subsidies more politically palatable.

If the larger figure is real, and taxpayers put up $250 million, they would pay for a third of the project, while for a $260 million project the taxpayer share would be 96 percent.

Having taxpayers pay nearly all of a new investment is becoming common. General Electric, for example, is getting Ohio taxpayers to cover 92 percent of a $126 million project

That’s how corporate socialism works — taxpayers donate capital, while the owners keep the profits.

Congel, along with GE and others, should rely on the market to finance projects. If a project is sound, the market will finance it and, if not, why should taxpayers donate?

When the Monroe County industrial development agency gave Congel’s plan initial approval I asked for its due diligence. The county provided a thin report stating that if taxpayers finance the restoration Medley Centre’s sales would grow from $30 million annually to $420 million.

The report cover states that Congel commissioned it. Judy Seil, director of the agency which gives money to companies, confirmed that Congel paid for the report. Still, she insisted, the report is the county’s due diligence.

That’s how corporate socialism works. The poor may have to pass a drug test to get benefits but rich applicants write their own ticket.

My due diligence shows that total inflation-adjusted income in Monroe County fell by $2.5 billion, or 13 percent, from 2000 to 2008, the latest data. With such a steep drop in incomes it seems unlikely that Medley Centre sales could grow 14-fold.

That’s how corporate socialism works — ignore inconvenient facts.

WINNERS AND LOSERS

As for that proposed hotel, my analysis of county hotel tax data shows demand for lodging unchanged for two decades. If taxpayers finance Congel’s hotel it would either fail or almost certainly force an existing hotel or two out of business.

That’s how corporate socialism works — government, not the market, picks winners and losers.

Last November I warnedthat New York State taxpayers would have their pockets picked ever more thoroughly because of a decision by the state’s highest court

The majority acknowledged that the New York State constitution bans gifts to corporations. To get around this, the court ruled, tax dollars can be funneled through a government economic development agency like the one Seil runs.

That’s how corporate socialism works — ignore inconvenient laws.

Because New York had one of the strongest prohibitions among the 50 state constitutions, this ruling shows how easily corporations can plunder state treasuries.

New taxes to pay for stadiums for team owners, billion-dollar-plus gifts for building factories and the pocketing by 2,700 companies of state income taxes paid by their workers have become common

That’s how corporate socialism works — divert money from schools and other public services to company coffers.

The 50 New Yorkers from libertarians to liberal Democrats who brought the case asked for a rehearing, citing serious factual errors in the high court’s decision

The court not only denied the request, it also imposed $100 for court costs. Attorney James Ostrowski of Buffalo, who represented the plaintiffs, called that a gratuitous “slap in the face of people who litigated a matter of vital public interest on a shoestring budget.”

That’s how corporate socialism works — penalize anyone with the temerity to fight being taxed to give to the already rich.

Congel may never get $250 million of taxes, but if he does it will cost taxpayers whether they visit his mall or not, while weakening or destroying existing local businesses.

That’s how corporate socialism works — privatize gains, socialize losses and destroy competitors who do not get subsidies

cosmo20002
06-07-2012, 11:46 PM
something about job creators

AustinChief
06-08-2012, 12:37 AM
I'm against anything that artificially props up and skews the "free market". Socialism in almost all forms is counterproductive in the long term. There is no question in my mind that corporate socialism is a major problem and needs to be addressed. I even put it above fixing our social welfare system on my list of priorities.

AustinChief
06-08-2012, 12:40 AM
It sucks that we have the far right who blatantly ignore this problem and the far left who ignore the continued slide toward a welfare state. If I were anyone of influence in the Republican party, I'd start a campaign to slash corporate welfare and upon completion use it as a platform to mandate cuts to general welfare.

Instead we get stuck with raging partisan hypocrites.

AustinChief
06-08-2012, 12:48 AM
btw.. most egregious example of this... Obamacare. Let's prop up big insurance!

Bewbies
06-08-2012, 01:08 AM
I agree. Stop building roadblocks you can selectively remove for people/companies that donate to your campaign fund.

BucEyedPea
06-08-2012, 06:31 AM
All socialism destroys...even the kind that claims to be "for the people."

mlyonsd
06-08-2012, 06:59 AM
Whoa, for a second there I thought this was going to be an OP about GM.

HonestChieffan
06-08-2012, 07:03 AM
Whoa, for a second there I thought this was going to be an OP about GM.

Solyndra, Gm.....good

Local tax abatement....evil

patteeu
06-08-2012, 07:19 AM
I agree. Stop building roadblocks you can selectively remove for people/companies that donate to your campaign fund.

:thumb:

KC native
06-08-2012, 09:01 AM
btw.. most egregious example of this... Obamacare. Let's prop up big insurance!

Yes. That's why I've never understood much out the gop's opposition to Obamacare. Corporate welare is right in their wheel house.

KC native
06-08-2012, 09:05 AM
I'm against anything that artificially props up and skews the "free market". Socialism in almost all forms is counterproductive in the long term. There is no question in my mind that corporate socialism is a major problem and needs to be addressed. I even put it above fixing our social welfare system on my list of priorities.

I agree. These types of deals have just been a race to the bottom. It takes so much money away from essential services (schools and the like that are .property tax funded).

Also, I think your next post is a perfect example of how a pragmatist could get something done. That's something that liberals and conservatives should be able to agree on.

KC native
06-08-2012, 09:06 AM
Solyndra, Gm.....good

Local tax abatement....evil

You are retarded.

mlyonsd
06-08-2012, 09:15 AM
You are retarded.So evidently you don't agree with the article you posted?

KC native
06-08-2012, 09:23 AM
So evidently you don't agree with the article you posted?

Perhaps you should read up on falsce choices.

While you're at it, read up on our taxing system so you understand why his and your comparison is retarded.

mlyonsd
06-08-2012, 09:31 AM
Perhaps you should read up on falsce choices.

While you're at it, read up on our taxing system so you understand why his and your comparison is retarded.LOL, I didn't think you'd want to answer my question.

Bewbies
06-08-2012, 10:31 AM
Yes. That's why I've never understood much out the gop's opposition to Obamacare. Corporate welare is right in their wheel house.

I might be with you on Congress jokers but not with GOP voters and conservative types.

HonestChieffan
06-08-2012, 12:11 PM
So evidently you don't agree with the article you posted?

He doesn't understand it.

J Diddy
06-08-2012, 12:18 PM
It sucks that we have the far right who blatantly ignore this problem and the far left who ignore the continued slide toward a welfare state. If I were anyone of influence in the Republican party, I'd start a campaign to slash corporate welfare and upon completion use it as a platform to mandate cuts to general welfare.

Instead we get stuck with raging partisan hypocrites.

Except slashing corporate welfare doesn't help the Republicans, it hurts them. You have the same dilemma on the left. Slashing general welfare doesn't help the party, it hurts them. This is why dick gets done.

KC native
06-08-2012, 05:24 PM
Whoa, for a second there I thought this was going to be an OP about GM.

Also, what is socialist about a streamlined bankruptcy because that's what the GM bailout basically was?

KC native
06-08-2012, 05:26 PM
LOL, I didn't think you'd want to answer my question.

Apparently you are as fucking stupid as dishonest.

HonestChieffan
06-08-2012, 08:57 PM
I love the ignorant little twirp. Back to the mailroom nitwit

patteeu
06-09-2012, 08:55 AM
Also, what is socialist about a streamlined bankruptcy because that's what the GM bailout basically was?

The part where you stiff the bondholders by handing their interest to the union.

Ace Gunner
06-09-2012, 10:11 AM
The american gov't is doing plenty, it's just that they are doing plenty for a few americans that own corporations. This is called corporatism.

Ace Gunner
06-09-2012, 10:13 AM
I love the ignorant little twirp. Back to the mailroom nitwit

your pants are tight.

mlyonsd
06-09-2012, 10:56 AM
Also, what is socialist about a streamlined bankruptcy because that's what the GM bailout basically was?
Well let's see if we can get through this without the name calling. I asked you if you disagreed with the article you posted.

That’s how corporate socialism works — government, not the market, picks winners and losers.
Which is exactly what the government did with GM.

And.

That’s how corporate socialism works — taxpayers donate capital, while the owners keep the profits.
Which is exactly what the government did with GM. In 2011 GM recorded a record $7 billion in profit. Guess how much they paid in corporate income tax. 0. That's a zero, not an 'O'. How? Because in their bailout it was written they would pay no corporate income tax for like 20 years.

And.

That’s how corporate socialism works — divert money from schools and other public services to company coffers.
Which, again, is what the government did with GM.

And.

That’s how corporate socialism works – taxpayers contribute when the market rejects.
Again, well you get the picture.

My initial post is accurate. You could easily insert GM into this picture. So if you agreed with GM's bailout I can't see how you can agree with the article. That's why I asked.

KC native
06-09-2012, 11:05 AM
The part where you stiff the bondholders by handing their interest to the union.

The bond holders were fucked regardless of how it was handled. That's what happens in bankruptcy.

KC native
06-09-2012, 11:11 AM
Well let's see if we can get through this without the name calling. I asked you if you disagreed with the article you posted.

Which is exactly what the government did with GM.

And.

Which is exactly what the government did with GM. In 2011 GM recorded a record $7 billion in profit. Guess how much they paid in corporate income tax. 0. That's a zero, not an 'O'. How? Because in their bailout it was written they would pay no corporate income tax for like 20 years.

And.

Which, again, is what the government did with GM.

And.

Again, well you get the picture.

My initial post is accurate. You could easily insert GM into this picture. So if you agreed with GM's bailout I can't see how you can agree with the article. That's why I asked.

The federal govenrment doesn't levy property taxes which are what pay for things like police and schools.

Completely different entities with different responsibilities.

Next time, you should read up on what taxes pay for what and who levies those taxes. It might mke you not look like a dumbass to people who understand the difference between municpalities and the federal government.

Also, if you can't understand the difference between a prepackaged stream lined bankruptcy and a straight handout then you really should stick to dishonest's and bep's threads.

mlyonsd
06-09-2012, 11:39 AM
The federal govenrment doesn't levy property taxes which are what pay for things like police and schools.

Completely different entities with different responsibilities.

Next time, you should read up on what taxes pay for what and who levies those taxes. It might mke you not look like a dumbass to people who understand the difference between municpalities and the federal government.

Also, if you can't understand the difference between a prepackaged stream lined bankruptcy and a straight handout then you really should stick to dishonest's and bep's threads.You're either intellectually dishonest or stupid. I'll take the high road and consider you the latter because being stupid isn't necessarily your fault.

Stewie
06-09-2012, 12:45 PM
Governments (Local, State and Federal) give tax breaks because they know employees of corporations pay a huge amount of REAL taxes. That is, taxes that matter and aren't recursive. It's been shown time and time again that giving a tax break to a corporation to encourage local development (and tax revenues) outweighs the corporate tax break. It's especially apparent in the KS/MO fight for businesses wanting to relocate. Governments on both sides of the line realize there's a huge benefit by giving a tax break to a corporation that employs hundreds of people. It's simple, and in the math of taxation.

Bump
06-09-2012, 01:05 PM
So taxpayers gave $70 billion to the already filthy rich?

And what the heck is the problem here?

If anything we should give more to the corporations and if you don't think so, you are a darned idiot.

<iframe width="420" height="315" src="http://www.youtube.com/embed/XC5NJQiOpRs" frameborder="0" allowfullscreen></iframe>


/cp conservatives

KC native
06-09-2012, 01:13 PM
You're either intellectually dishonest or stupid. I'll take the high road and consider you the latter because being stupid isn't necessarily your fault.

It's obvious the material is completely over your head.

KC native
06-09-2012, 01:15 PM
Governments (Local, State and Federal) give tax breaks because they know employees of corporations pay a huge amount of REAL taxes. That is, taxes that matter and aren't recursive. It's been shown time and time again that giving a tax break to a corporation to encourage local development (and tax revenues) outweighs the corporate tax break. It's especially apparent in the KS/MO fight for businesses wanting to relocate. Governments on both sides of the line realize there's a huge benefit by giving a tax break to a corporation that employs hundreds of people. It's simple, and in the math of taxation.

You know how I know you didn't read the article?

The proof is on the other side of your argument. Municipalities almost always end up on the short end of the stick when they start granting tax abatements.

Stewie
06-09-2012, 01:38 PM
You know how I know you didn't read the article?

The proof is on the other side of your argument. Municipalities almost always end up on the short end of the stick when they start granting tax abatements.

I read the whole blog. I won't defend the stupidity of people in government for not knowing what the hell is going on. Business people are always smarter than gov't people.

Tax abatements work where I live. We're just a small community and have reaped the rewards from the stupidity of the KCMO government.

I'm sure, on average, that municipalities lose money on these deals, but that's due to the fact that public officials in big cities are idiots... it's in the paper every day.

patteeu
06-10-2012, 12:48 AM
The bond holders were ****ed regardless of how it was handled. That's what happens in bankruptcy.

Bzzt. Wrong answer.

scho63
06-10-2012, 04:18 AM
I'm against anything that artificially props up and skews the "free market". Socialism in almost all forms is counterproductive in the long term. There is no question in my mind that corporate socialism is a major problem and needs to be addressed. I even put it above fixing our social welfare system on my list of priorities.

:thumb:

|Zach|
06-10-2012, 04:21 AM
Governments (Local, State and Federal) give tax breaks because they know employees of corporations pay a huge amount of REAL taxes. That is, taxes that matter and aren't recursive. It's been shown time and time again that giving a tax break to a corporation to encourage local development (and tax revenues) outweighs the corporate tax break. It's especially apparent in the KS/MO fight for businesses wanting to relocate. Governments on both sides of the line realize there's a huge benefit by giving a tax break to a corporation that employs hundreds of people. It's simple, and in the math of taxation.

Yea, KS and MO fighting over those businesses has created quite the zero sum game.

blaise
06-10-2012, 06:30 AM
Monroe County NY's biggest problem isn't some developer trying to renovate a mall. It's that it's a crime infested dump. But that's ok, most of the people I know that live there move away. They get sick of paying taxes for a shithole city like Rochester.