CHAPTER VIII RETAIL CORPORATE WELFARE
More and more the news out of Washington, D.C. are statements that America's corporations are often permitted tax incentives, subsidies, financial and other types of encouragement that are generally not available to small businesses. This has been termed as "corporate welfare." Generally speaking, "corporate welfare" programs are products of local, state and federal initiatives and are supposed to be directed to community redevelopment. The question that must be resolved is, "Jobs at what price?" The author of this study has surveyed this dilemma from east coast to west coast -- with particular interest in local, state and federal benefits offered to mega-retail discount chains, and only occasionally provided small business or specifically, small retailers.It is true and sad indeed that, in the new world of trade and declining jobs, local and state governments are finding themselves trapped in bidding wars for private investment. They've been offering a "candy store" of tax abatements, credits and loan subsidies in the hope of keeping existing jobs or getting new jobs. More often than not, they're left holding the bag. A number of the nation's largest corporations, both retail and non-retail with annual gross revenues of almost $100 billion and upward are in effect being subsidized by municipalities, school districts and taxpayers with the employment of millions in redevelopment funds to build their stores in California and in other states with similar programs. What chance does the small retailer have for survival? Has he or she been given the opportunity to improve their downtown facilities with a similar use of funds? This is certainly "corporate welfare" at the retail level.
"The dirty little secret in the incentives game is that the real criteria for site selection are skill and cost of labor, proximity to customers and price of real estate. Tax breaks are rarely the deal maker. ...a firm's variable costs - charges that come on top of fixed expenses like lease payments - state and local taxes make up at most 3%. Giveaways are likely to have little impact unless other factors are virtually equal."36
"The dirty little secret in the incentives game is that the real criteria for site selection are skill and cost of labor, proximity to customers and price of real estate. Tax breaks are rarely the deal maker. ...a firm's variable costs - charges that come on top of fixed expenses like lease payments - state and local taxes make up at most 3%. Giveaways are likely to have little impact unless other factors are virtually equal."36
<< Home