Reuters | 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 [1], 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.
[2]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.
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 [1], 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.
[2]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.
1 comments:
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