THE REAL WELFARE QUEENS

I’m sure most of you have seen this or similar sentiments in one form or another, most likely in a chain email or via a Facebook posting. My own usual response lately has been to agree, and point out that Mitt Romney hasn’t held a job for six years , has made at least $40 million over the last two, and paid a lower tax rate than many slaving away for forty hours or more a week.

He was able to do so due to U.S. law passed by Congress that gave him that advantage, exactly the same as the law establishing the Temporary Assistance to Needy Families (TANF), the program that replaced welfare cash assistance, was passed by Congress.

The constant drumbeat of Republicans/comservatives in favor of free enterprise ignores the truth about capitalism. In many cases what is presented as examples of the benefits of business growth and expansion and the culmination  of hard work combining with a daring, entrepreneurial spirit, turns out to be the same bleeding of the public coffers that, if done by welfare recipients, incites outrage and calls for drug testing of the beneficiaries.

I looked at one aspect of this phenomenon the other day with regards to the 2012 Republican ticket. https://umoc193.wordpress.com/2012/08/31/uh-maybe-we-didnt-build-that/

In short, there is ample assistance available as a safety net to poor people, but there is also assistance  from the very same government that goes to people or companies (and remember…corporations are people, too) who or which are far from poor.

For example the total funds used in the last fiscal year for TANF and related required expenditures by the states was just over $33 billion.

On the flip side over $4 billion in subsidies in various forms go to oil companies every year.

For the past sixteen years farm subsidies have averaged over $17 billion per year. You think that money goes to your typical family farmer like Ray Kinsella? Wrong, nitrogen fertilizer breath. 75%, or more than $12 billion, goes to agri-businesses or other large entities or, in at least one case, to a scion of one of the wealthiest American families who lives in that agricultural heartland commonly called New York City.

Then there are the huge corporations (all with large extended families I am sure suffering scarcity of food, shelter and clothing) who manage to pare their income tax rate to 0% while garnering profits in the billions. In fact, in one recent year there were ten corporations with profits of $3.1 billion or more, collectively earning $138 billion, who paid no U.S. income tax.

Now the top tax corporate tax rate is 35% but let’s assume for our purposes that these companies would have paid an average of 25% if not for the (perfectly legal) tax avoidance schemes they employed. That cost the U.S. treasury $34.5 billion, more than the cost of TANF to both the federal AND state governments.

Now consider the over $140 billion worth of defense contracts in effect that are NO-BID. That means they were awarded without competition and in documented cases to companies that cannot produce the contracted for product or service effectively.

These no-bid contracts received greater scrutiny during the Bush years since many connected to military efforts in Iraq and Afghanistan were given to companies with which V.P. Dick Cheney had a close relationship. I don’t care who is awarding them, when governments on any level remove safeguards in awarding contracts waste and corruption are sure to follow.

Thus it is easy to assume that a minimum of 10% of that $140 billion is ill-spent, or another $14 billion going to the haves.

There are other ways by which governments, particularly state and local entities, assist private businesses when they wish to develop or expand within a given area. Direct subsidies, tax forgiveness, low interest loans, and building infrastructure to support these developments are common.

One method frequently employed which has had some effect here locally in Morgantown is tax increment financing (TIF). For the uninitiated let’s say a developer wants to build apartments and commercial space in an area of a town given over to rundown college student housing. Many of the converted houses are nearing condemnation status and contribute little to the tax coffers of local government.

The developer’s project is sure to replace all that with much more valuable property, generating increased real estate tax revenues as assessments increase when completed.

The developer also needs help in financing the project. The local government creates a “tax increment financing district”. The expected increase in tax revenues over a given period is commited to helping pay for the project through bonds that are issued by the district.

All well and good, to this point. There have been probably thousands of successful applications of this tactic in the U.S. and even in foreign countries.

But these TIF’s can result in negative consequences. The hypothetical about student housing/commercial space was a real life occurrence here in Morgantown. The apartment complex was built, but not the commercial space nor a desperately needed promised parking garage. The company that began the venture was not a huge business (I know some of the partner brothers) but somewhat successful in its own right.

Yet, complications connected to other properties and a prolonged legal battle sent the corporation into bankruptcy and the apartment complex was sold for around $11 million. Sounds fine, right? Tax assessments will rise and more real eatste taxes will be generated in the future. Ah, but the buyer was WVU which outbid a private company. Since the university is tax exempt, NO tax money will now come to the city, county or school district.

A similar problem is faced by a Pennsylvania school district. Shell Oil (no mom and pop there) has been handed several tax breaks to locate a cracker plant…related to shale gas drilling, not saltines…in a Beaver County community.

Population growth may put more burdens on the school district, but they will lose almost $300,000 in taxes from the current owner of the land should the plan go through. Read more on that here from the excellent Post-Gazette columnist Brian O’Neill. http://www.post-gazette.com/stories/opinion/brian-oneill/cracker-plant-tax-break-may-leave-schools-with-crumbs-651513/

I feel no need to evaluate each and every program that aids corporations’ bottom line or the application of such program to a specific project or process, beyond any editorializing I have already done.

In many instances the intended purposes are fulfilled so that the general public benefits. But then that is the same with TANF where that assistance has resulted n individuals and families getting healthier and progressing economically sufficiently so that they can stand on their own.

Folks, welfare is welfare and, while some recipients may end up driving Cadillacs, probably even more hire chauffeurs to do the driving.

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