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OP-ED | Corporate Welfare Or Competition? It’s All Part of a Big Equation

by Heath W. Fahle | Sep 27, 2013 11:12am
(12) Comments | Commenting has expired
Posted to: Business, Corporate Watch, Economics, Opinion, Taxes

The State of Connecticut will provide $31 million in state funds to Bass Pro Shops to construct a new retail store in Bridgeport. The move is being called “economic development” but most recognize it by its real name: corporate welfare. Gov. Dan Malloy often notes that in a perfect world, such assistance to businesses would be unnecessary but since other states do it, the State is forced to compete.

Gov. Dan Malloy often notes that in a perfect world, such assistance to businesses would be unnecessary but since other states do it, the state is forced to compete.

One can’t help but wonder why the Governor’s spirit of competition doesn’t extend to other issues. For example, policymakers in North Carolina decided this year that the state’s tax code posed a significant disincentive to business growth in the Tar Heel State, pointing to a state business tax climate ranked 44th in the nation last year.

Lawmakers passed a sweeping overhaul of the tax code, reducing personal income tax rates, business tax rates, eliminating the estate tax, and other measures. The Tax Foundation estimated that with the changes, North Carolina’s business tax climate would rank 17th in the nation. Connecticut’s business tax climate was ranked 40th in the same study.

But the Governor is right that other states are competing and it isn’t just for jobs. In August, the Tax Foundation highlighted the migration of personal income among states between 2000 and 2010. The data indicates that $4.5 billion in personal income left Connecticut during that time period.

According to a new web tool, How Money Walks, it is apparent that Connecticut’s loss was mostly Florida’s gain, with $4.83 billion moving south between 1992-2010. The tool also offers an interesting look at county-level data. Among several interesting points, it shows that nearly $1 billion moved from Fairfield County to just three counties in Florida: Palm Beach, Lee, and Collier counties.

Strikingly, half the counties in Connecticut actually grew during that time (Litchfield, Middlesex, Tolland, and Windham), speaking to the magnitude of the migration from Fairfield, New Haven, and Hartford counties.

As if that weren’t enough, there is also a new web tool to show how much income and wealth can be gained or lost by moving to a new state. WhyNotMove.org uses marital status, birthdate, current annual earnings, retirement and other savings, and other data to estimate the discretionary income gain or loss associated moving to another state (and holding other factors equal).

For example, a married 40-year-old couple making Connecticut’s median household income of $70,000 (Connecticut’s median household income according to the Census Bureau), would save $1,282 per year by earning it in Florida rather than Connecticut. However, the household remains better off in Connecticut than in New York or Massachusetts. A move to the Empire State would cost $645 in discretionary income while a switch to the Bay State would cost $388.

The tool also offers the ability to calculate based on property and other taxes if you enter information about your home value, monthly mortgage payment, and years left on your mortgage.

Though imperfect tools in many ways (they are estimates that require several big assumptions), these resources highlight the competition for people and jobs between the states. Subsidies for Bass Pro Shops or other employers represent a strategy for competing, but compared to the larger changes pursued in other states, Connecticut needs to do more to keep up.

Heath W. Fahle is the Policy Director of the Yankee Institute for Public Policy and a former Executive Director of the Connecticut Republican Party. Contact Heath about this article by visiting www.heathwfahle.com

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(12) Comments

posted by: Commuter | September 29, 2013  2:17pm

Heath continues to cite these right-wing “think tanks,” which are actually not doing much true policy work but serve instead to provide pseudo-research so that flaks, er, “Policy Directors,” from other right-wing “think tanks” can cite them.

It is part of the cynical network of astroturf front groups funded by well-known wealthy ideologues like Bradley, Scaife, The Koch Brothers, Olin, Earhart, Castle Rock, and JM Foundations.

This isn’t opinion, it’s propaganda.

By the way, who funds the Yankee Institute?

posted by: art vandelay | September 29, 2013  7:25pm

art vandelay

I don’t get it.  The state is spending 31mil to entice Bass Pro Shops to construct a retail store in one of the most crime ridden cities in New England.  The state legislature last session passed some of the strictest gun laws in the nation yet are now in the business of selling them.  Only in Connecticut.

posted by: dea | September 30, 2013  2:22pm

It seems to me that if there is a market for their products in Bridgeport Bass Pro Shops will locate there anyway. This looks more like another one of the Governors misguided give aways. The citizens of the state would probably be better served if the Governor radomly selected 31 citizens of the state and gave each $1,000,000. They would probably do more to the states economy thab giving it away to an out of state corporation.

posted by: timelord | October 1, 2013  11:38am

@Commuter - who funds the liberal think tanks? This piece is not propaganda; it’s analysis supported by documented references.

Your comment, on the other hand, is propaganda. You stated *opinion* based on zero facts.

posted by: Salmo | October 2, 2013  10:24pm

There is a sort of bitter irony here. We bring in big box outfitters like Cabela’s, Bass Pro, and to a lesser extent, Wal-Mart, which are crushing the Mom and Pops right out of business and we keep throwing out the welcome mat to the tourist trade. In the meantime Connecticut is or was last or next to last in the stewardship of natural resources. You can’t be closing fish hatcheries, closing parks and forests, selling off open space, let State resources fall into disrepair, and banning people from beaches and hope these types of business ventures will survive here. Sooner or later they will use up their tax abatements and move on.

posted by: Commuter | October 3, 2013  8:10am

What network of “liberal” think tanks funded by a handful of individuals are you referring to? There is no comparable enterprise to the group that Heath works for. Go look it up, the facts are as I’ve indicated. This is not analysis, and its sources are in no sense objective. Echo chamber flakery.

posted by: JamesBronsdon | October 3, 2013  10:24am

Commuter, from a 10-second Google Search, this from The Nation, a leading liberal publication:
The Center for American Progress, Washington’s leading liberal think tank, has been a big backer of the Energy Department’s $25 billion loan guarantee program for renewable energy projects. CAP has specifically praised First Solar, a firm that received $3.73 billion under the program, and its Antelope Valley project in California.

Last year, when First Solar was taking a beating from congressional Republicans and in the press over job layoffs and alleged political cronyism, CAP’s Richard Caperton praised Antelope Valley in his testimony to the House Committee on Energy and Commerce, saying it headed up his list of “innovative projects” receiving loan guarantees. Earlier, Caperton and Steve Spinner—
a top Obama fundraiser who left his job at the Energy Department monitoring the issuance of loan guarantees and became a CAP senior fellow—had written an article cross-posted on CAP’s website and its Think Progress blog, stating that Antelope Valley represented “the cutting edge of the clean energy economy.”

Though the think tank didn’t disclose it, First Solar belonged to CAP’s Business Alliance, a secret group of corporate donors, according to internal lists obtained by The Nation. Meanwhile, José Villarreal—a consultant at the power-
house law and lobbying firm Akin Gump, who “provides strategic counseling on a range of legal and policy issues” for 
corporations—was on First Solar’s board until April 2012 while also sitting on the board of CAP, where he remains a member, according to the group’s latest tax filing.
- See more

posted by: Commuter | October 3, 2013  11:30pm

Your reference is about the Center for American Progress and its failure to disclose its donors. That is not the same thing, at all. Heath is employed by the same people who employ Heath’s counterparts, for the purposes of giving the appearance of their views being based on research, when no such research has been conducted.

It is purely, and deeply cynically, for the purpose of propaganda. There is no equivalent to it, not even the Center for American Progress, which is but one institution, however flawed.

Feel free to demonstrate the contrary, but you have failed to do so here.

posted by: JamesBronsdon | October 4, 2013  8:36am

Commuter, my point was “a secret group of corporate donors” which frankly I don’t give a hoot about, but you seem to worry about what’s going on behind the curtain. All of these organizations - liberal or conservative - have individuals or organizations behind them with particular vested interests. It’s free speech. I don’t see the harm in that or in PACs or in individuals or corporations supporting particular candidates. What’s important is how persuasive or credible they are. Let’s not get our knickers in a twist because there are special interests. Everyone’s interest is a special interest. Yours as well as mine.

posted by: Commuter | October 5, 2013  10:17am

My point, again, is that these sources are not credible, and the fact that they are organized and coordinated to propagandize an ideology, attempting to pass it off as objective research and independent opinion, discredits Yankee Institute and its Policy Director.

posted by: RJEastHartford | October 5, 2013  11:25am

Capital moving across border, yes, because people/entities with resources can do it. However, most jobs have become contracted, part-time, temporary with low wages and no benefits, people do not have the income to save (invest in the markets) for retirement, healthcare for themselves and their children, and yes, college costs. This includes families that once had higher paying positions with some security. Those types of jobs are deemed “too expensive.” Big money, as mentioned in other posts have helped lay the platform for this federally. While against “government spending” These groups do not account for the redirection of government money to business in the form of more federal tax advantages, low cost borrowing (fed reserve) and grant money to outright contracts for services. With this argument, I do not see my taxes going down appreciably. All this will help large business and corporations by redirecting this stream of revenue but can it return the bakery, the tailor, or the garage/mechanic to a point where they are again making a good living? Perhaps only if households can continue to borrow. As a result states have to do the same. Must look at the big picture or this income trap will be too tight to ever get out of for most workers.

posted by: JamesBronsdon | October 5, 2013  12:53pm

Commuter, your point, then, applies equally to CAP and other liberal think tanks as much as it does to the Yankee Institute. I commend your healthy skepticism.