The corporate welfare shell game: Arkansas keeps playing | Arkansas Blog

Tuesday, August 9, 2016

The corporate welfare shell game: Arkansas keeps playing

Posted By on Tue, Aug 9, 2016 at 7:56 AM

click to enlarge LOVE THAT CORPORATE WELFARE: Sen. Tom Cotton and Lt. Gov. Tim Griffin in file photo lauding the corporate welfare-supported Welspun pipe plant in Little Rock. - YOUTUBE/ARKANSAS BUSINESS
  • YouTube/Arkansas Business
  • LOVE THAT CORPORATE WELFARE: Sen. Tom Cotton and Lt. Gov. Tim Griffin in file photo lauding the corporate welfare-supported Welspun pipe plant in Little Rock.
Also for your reading pleasure this morning: Yet another in the massive body of work on the failure of corporate welfare as economic stimulus, this time from Washington Monthly.

Arkansas plays this game to the best of its ability and wants to do more.  The  November ballot includes a breath-taking amendment that will allow the state to pledge tax money to guarantee debt for private business, plus allow local governments to hand out tax money to corporate lobbying groups known as chambers of commerce. Gov. Asa Hutchinson recently signed off on a massive handout to a Chinese communist-led company  for a reputed pulp mill near Arkadelphia (with little regard to environmental and other questions about the operation).

Taxpayer handouts to rich corporations are an article of faith to most politicians. But, says Washington Monthly:

Many states, including Texas, New York and Louisiana [editor's note: and Arkansas], fund “war chests” specifically aimed at bringing companies and jobs to their state, often poaching these firms from other states. All told, estimates indicate this game of tug-of-war among states costs taxpayers $70 billion a year – while creating very few, if any, new jobs and lining the pockets of the companies taking advantage of these incentives.

Supporters claim programs like these bring new business activity and employment opportunities to residents of the state. Yet, research has found that rather than paying for new jobs and growth, taxpayers are funding business activity that would have likely occurred anyway. In other words, a small subset of businesses (usually large ones) profit at taxpayers’ expense for hiring or expansions the businesses already had planned.

Studies funded by the Ewing Marion Kauffman Foundation took an in-depth look at the flagship business incentive programs in two states: Kansas and Missouri. The findings were striking.

In Kansas, the almost $1 billion spent from 2006 to 2011 on the state’s incentive program had no impact on job creation. Businesses that received an incentive were no more likely to create new jobs than those firms that did not receive an incentive. Moreover, in a survey of 24 recipients of incentives, two-thirds of firms indicated they would have invested even if they hadn’t received an incentive.

Across the state line, companies in Missouri created between one and two jobs per incentive. While this may seem like good news, it amounts to an incredibly costly job creation strategy, with each of these jobs costing Missouri taxpayers $1 million. Over $700 million in incentives were spent to create a few hundred jobs.
Don't try to confuse any of the ruling class in Arkansas with facts such as these.

Speaking of corporate welfare: One recipient of Arkansas handouts in the past has been Welspun, the pipemaker at the Little Rock Port. You'll recall that Republican politicians frequently posed at Welspun in an orchestrated effort to push the Keystone Pipeline to transport dirty tar sands crude from Canada across sensitive aquifers in the Midwest to refineries in Texas. Welspun built and sold pipe for that project. This pipeline was a good thing, the likes of Tim Griffin, Tom Cotton and French Hill said repeatedly because it provided work in Little Rock, never mind the potential damage the line might cause.. I see Welspun is back in the news today for getting a contract  to build some pipe for a project to carry shale oil from Oklahoma across Arkansas to Tennessee. A number of people in Arkansas aren't happy about this project. They are raising  issues in state regulatory arenas. Any day now, I hope the Republicans from Arkansas will hold a news conference in front of a stack of pipe and demand that regulators get out of the way.

PS: Speaking of welfare for the rich, the New York Times today has reporting on new competition among states to provide the best tax breaks for tax-avoiding trusts and estates. Don't tell Arkansas legislators about this. Besides, we eliminated the Arkansas estate tax years ago. It was a multi-million-dollar boon to the Waltons and others, but as far as I can tell hasn't brought any relocation of vast wealth here.

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