Accounting for corporate welfare: Arkansas lags | Arkansas Blog

Wednesday, June 20, 2012

Accounting for corporate welfare: Arkansas lags

Posted By on Wed, Jun 20, 2012 at 9:38 AM

SUBSIDIZED: Among other taxpayer benefits, the Welspun plant in Little Rock is exempt from property taxes.
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  • SUBSIDIZED: Among other taxpayer benefits, the Welspun plant in Little Rock is exempt from property taxes.

A friend sent me a recent blog post by Jim Hightower on corporate welfare and the practice in 16 states, including Arkansas, that allows corporations to deduct state income taxes from workers and deposit it — not with the state — but directly in their own bank accounts. Nifty.

These heists are rationalized in the name of "job creation," but that's a hoax, too. They're really just bribes the states pay to get corporations to move existing jobs from one state to another, or they're hostage payments to corporations that demand the public's money – or else they'll move their jobs out of state.

Hightower's blog note provides a link to the website of Good Jobs First, a research organization aimed at making corporate welfare payments more accountable and more effective. Of particular interest is state-by-state summaries of corporate welfare practices. In Arkansas, for example:

Given the limited cost information that is made public, it is difficult to assess the overall fiscal impact of economic development programs in Arkansas. Every few years the state’s Department of Finance and Administration publishes figures purporting to show the total spent on subsidies and the cumulative amounts received by individual companies. The report released in September 2008 stated that a total of $167 million was spent in 2005-2007, with the largest amount ($17 million) received by Wal-Mart. However, this tally appears to be incomplete, and the absence of annual cost data (and data on outcomes such as jobs and wages) limits meaningful analysis.

Most of the incentives the state offers take the form of sales or income tax credits. The Targeted Business Incentive program allows companies to keep a portion of the payroll taxes they withhold from their workers’ pay. One of the biggest subsidy recipients in recent years has been the Danish windmill blade company LM Wind Power (formerly LM Glasfiber), which hired aggressively at a plant in Little Rock but later laid off many of those workers (see below).

According to the Center on Budget and Policy Priorities, Arkansas publishes one of the least useful tax expenditure budgets available – it omits major tax expenditures and isn’t even available online. Worse, the state is among a shrinking minority of states with no online subsidy recipient disclosure. None of the five major programs we examined revealed such information on a regular basis.

A closer examination is given the deals extended LM Glasfiber, Welspun (no property tax on its Little Rock plant, for example) and Walmart (yes, the giant retailer enjoys some Arkansas taxpayer subsidies.)

I'm wondering if those braying about the wondrous coming "on-line checkbook" of state expenditures might push for a detailed disclosure of corporate subsidies, including named recipients of taxpayer handouts and the precise amounts. Since the loudest brayers tend to be the biggest opponents of removing corporate influence from campaign finance (Lt. Gov. Mark Darr, for example), I'm not optimistic.

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