Daily Archives: December 6, 2012

State & Local Corporate Welfare

State and local governments spend $80 billion a year trying to attract businesses away from each other, reports the New York Times. This is a giant zero-sum game, the paper suggests, and in fact may even slow growth in some areas by increasing the tax burden. The Times even admits that it has received $24 million in subsidies from the city and state of New York over the past 12 years.

Coincidentally, the Antiplanner is back in the air today to Boise, where I’ll be speaking to legislators about the follies of tax-increment financing (TIF), which is one of the main ways local governments subsidize corporations. Idaho cities and counties spend more than $50 million a year on TIF, which is a lot for a small state: nearly 20 percent of the property taxes collected in at least one county goes to TIF subsidies.

When Jerry Brown was mayor of Oakland, 10 percent of his salary came from TIF. Rather than be seduced by the money, he realized the folly of giving cities the power to effectively steal money from other tax entities. In 2011, he persuaded the California legislature to abolish TIF in California, the state that had invented it in 1952 and which up to that time was doing more TIF than all other states combined. Other states should follow suit.

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