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  • From: "Common Sense Foundation" <david@common-sense.org>
  • To: <common-sense@lists.ibiblio.org>
  • Subject: Consider This: High-Tech Corporate Welfare
  • Date: Fri, 5 Nov 2004 16:50:59 -0500

Title: High-Tech Corporate Welfare

The COMMON SENSE Foundation

Consider This…

HIGH-TECH CORPORATE WELFARE

Even the supporters of yesterday’s quarter-billion-dollar gift to Dell were a little embarrassed.

The General Assembly convened a one-day special session yesterday for the sole purpose of bribing the Dell Corporation to build a manufacturing plant in the Triad. The deal was so generous and open-ended that even legislators who voted for the proposal said that it made them nervous.

Last year it was Merck and R.J. Reynolds. Now the stakes are even higher for fewer beneficiaries. This time, only Dell gets the goodies.

Its not often that legislators from the majority party call a major bill such as this one not well-thought-out and bad public policy. But thats a conclusion thats all too easy to reach when you look at the numbers of this bill, which gives Dell up to $200,000 per job created over the next twenty years.

Thanks to this giveaway, Dell could conceivably reduce its state tax liability to nothing. Dell will have special lax rules as well: no wage standard is in the bill (unlike many previous incentives measures), and Dell is only required to pay half of its full-time employees individual health-insurance premiums.

There are only weak safeguards in the bill to protect the states enormous investment. Accountability and reporting provisions are noticeably absent or watered down.

Even the bills sponsors admitted that the incentives game is out of control. Yet few state leaders seem to have the courage to stop the merry-go-round and demand some fiscal responsibility and accountability.

There is ample evidence to suggest that smart businesspeople make relocation decisions based on a number of factors, with tax and incentives policy ranking rather far down the list. North Carolina is consistently at the top of the popularity list for new corporate facilities, suggesting that this type of deal is so unnecessary that it does more for the reputation of politicians than it does for the long-term economic health of the state and its residents.

The states economy is hurting and is in transition. But deals like the donation to Dell will only make things worse in the long run as they take away future tax revenues with little or no promise of any real return.

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  • Consider This: High-Tech Corporate Welfare, Common Sense Foundation, 11/05/2004

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