Boeing puts squeeze on states in search of corporate welfare


Great column by Jay Hancock of the Baltimore Sun about Boeing's quest for taxpayer-funded goodies. Some highlights:

Boeing denies that last part, of course. The corporate "site selection" charade includes the pretense that companies are not shaking down states and counties for "incentives" such as tax discounts, cheap loans, cash gifts, property grants and so forth.

"Boeing has not asked for any incentives," says Boeing spokeswoman Mary Hanson. "What a state has chosen to include as part of its proposal is its decision."

What a crock of kielbasa. Boeing knows it can expect corporate welfare of at least $100 million as states trip over each other with blandishments for a chance to build the company's new 7E7 jetliner. Any state that doesn't bend down to get spanked will not be considered. ...

Orchestrating the bake-off is Boeing agent McCallum Sweeney Consulting, the hired guns who helped separate $300 million from Mississippi taxpayers three years ago so that Nissan Motor Co. would build an SUV and minivan plant there.

Extracting incentives from reluctant governments is McCallum's specialty.

In a deal three years ago for an Alabama Navistar engine factory, the "incentive package negotiated was four times larger than [that of a] Honda assembly plant" one-fourth the size, McCallum brags on its Web site.

The smorgasbord of taxpayer giveaways McCallum can secure for your firm, according to its promotional material, includes "tax abatements," "tax credit," "tax exemptions," "grants," "site development," "interest subsidies," "capital contributions," "special tax rating" "and more. ..."

This kind of racket has been going on for decades, of course. But the Boeing project is different in a way that cranks up the prurient interest and gall factor: States don't have money to pay for basic programs these days, let alone to give away to big corporations.

Michigan wants Boeing, but Michigan faces a projected deficit of $1.5 billion, has cut Medicaid, trimmed $127 million from state colleges and universities and is reducing its prison population. Texas wants Boeing, but Texas just dealt with a $10 billion revenue shortfall by cutting teacher health benefits and medical coverage for the working poor. ...

I know, I know. Corporate welfare apologists say the Boeing plant will generate spinoff jobs, taxes from new workers and other marginal revenue that will "pay back" the government giveaways.

This is sophistry. Revenue forgone is revenue forgone, and new factories and workers impose extra burdens on government that soak up any incremental taxes. The liberal argument against incentives - that they give taxpayer money to fat cats - is well known.

The lesser-heard conservative position clinches the case. By bending tax statutes into knots for whiny corporations, states tilt the business playground, maim pledges of equal treatment under the law and engage in Soviet-style economic planning. When is Congress going to do something about this?

Read the whole thing. And please note, this writer is focused on tax abatements, not on the kind of direct cash payments and loans that Tulsa voters are being asked to provide to Boeing.

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This page contains a single entry by Michael Bates published on August 13, 2003 1:29 AM.

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