Chasing failure with subsidies

Published 11:10 am Friday, May 16, 2014

A growing state incentive that is not exclusively Republican or Democrat in nature is the prevalence of subsidies to attract or keep business or industry.

States vie against each other using taxpayer money to lure or hold a business that only needs mention it may desire a climate change; the climate being one of lower taxes, cheaper labor or cash payments.

According to research conducted by the New York Times, the total annual national bill for this corporate “have jobs will travel” industry is $80 billion.

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But does this make sense to taxpayers, and are taxpayers the winners in this roulette?

Consider the great State of Texas, by any measure the champion of subsidies in the 50 states.

Recently Texas announced the offices of Toyota of America would relocate from their 40-year stay in California to Texas, bringing their 4,000 corporate jobs with them. While this is not a manufacturing facility and may not offer many, if any, new jobs to Texans, it does offer a tax base when the subsidies are exhausted. And if the subsidies are not renewed to keep Toyota in Texas.

The Texas subsidy package is estimated to exceed $40 million.

For Texas this may be small change as its annual expenditure for business attraction averages just over $19.1 billion, or almost one fourth of all U.S. subsidy dollars spent. That number amounts to a whopping $759 dollars per capita and $.51 cents of every Texas state tax dollar collected.

Like every state Texas has to determine its budget priorities, so an examination of where their money is spent reveals the values of Texas through its elected officials.

Here are some of the available statistics about Texas outcomes compared to other states, as reported by The Texas Observer (April 16, 2013):

In high school graduations Texas ranks number 50, last in the US;

Texas invests an average of 27 percent less in students than the national average;

In funding mental health Texas ranks 50th;

Texas has the most citizens without health insurance;

Texas has the second highest percentage of uninsured children;

Texas ranks fourth highest in women living in poverty;

Texas ranks the lowest in voter turnout.

Those numbers reflect other areas where Texas might consider the need for additional investment, should legislators find them worthy of state attention.

But with the investment in subsides, does that mean that Texas businesses return to Texas the highest and healthiest environmental measures?

Apparently not. Texas ranks first in carbon emissions, which result in human health concerns. Texas also ranks forst in the production of hazardous waste materials, another human health issue.

The problem is no state wins competing for the highest cost to its taxpayers and it does not need to work this way.

The United States has been a world leader in restricting the stealing of industry by other nations through the World Trade Organization and The Organization for Economic Cooperation and Development.

By extending the logic of refusing to pit taxpayers against one another, often for a detriment to public services and obligations, the U.S. would save $80 billion per year in taxpayer dollars that could improve roads, airports, mass transit or schools and health care obligations.

Texas seems to be at war with its citizens, denying basic services and instead offering mega-companies incredible incentives. From 2005-2012 Texas granted Amazon alone $277 million and Samsung $232 million.

It is time to end this form of corporate charity at the expense of taxpayers who can no longer afford the generosity.


Jim Crawford is a retired educator and political enthusiast living here in the Tri-State.