Fodder

[SEC=UGA]

IRONDEQUOIT, N.Y. — A proposal to spend $250 million of taxpayer money on a retail project here illustrates the damage state and local subsidies do by taking from the many to benefit the already rich few.

 

Nationwide state and local subsidies for corporations totaled more than $70 billion in 2010, as calculated by Professor Kenneth Thomasof the University of Missouri-St. Louis

In a country of 311 million, that’s $900 taken on average from each family of four in 2010. There are no official figures, but this one is likely conservative because — as documented by Thomas, this column and Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations — these upward redistributions of wealth keep increasing.

 

In Irondequoit, just outside Rochester, N.Y., and a few miles from where I live, developer Scott Congel wants $250 million in sales taxes to finance rebuilding the Medley Centre mall while adding condominiums and a hotel. Typically local governments issue bonds, which are paid off using sales tax receipts that are diverted from public purposes to the developer’s benefit.

 

Subsidies for retail businesses are the worst kind of corporate welfare because, as the end of the economic chain, retailing grows only when population and incomes increase. If population or income falls, then subsidies for new projects like Congel’s damage existing businesses, where people would otherwise be spending their money.

 

The mall, which struggled from the start, was built in 1990 for $140 million in today’s dollars. A Congel associate, Adam Bersin, bought it in 2005 for less than $6 million in today’s dollars. He then persuaded the Monroe County industrial development agency to issue $5.4 million in bonds and then flipped the real estate to Congel in 2007.

 

Today the mall is empty, its doors sealed, except for a Sears at one end and a Macy’s at the other, each with a handful of customers during my visits.

Congel promised a $260 million project, but five years on nothing is built and Congel is seeking delays in fulfilling promises for which the mall was granted property tax breaks.

That’s how corporate socialism works – taxpayers contribute when the market rejects.

 

TAXPAYERS’ EXPENSE

Congel has never spoken publicly about his plans for the mall and neither Congel nor any of his representatives, including a lawyer, returned my calls. But la st month hi s office gave a local TV station a statement promising to invest not $260 million but $750 million

 

My review of construction costs for hotels and condominiums suggests the $750 million figure is wildly inflated, but it may make the subsidies more politically palatable.

 

If the larger figure is real, and taxpayers put up $250 million, they would pay for a third of the project, while for a $260 million project the taxpayer share would be 96 percent.

 

Having taxpayers pay nearly all of a new investment is becoming common. General Electric, for example, is getting Ohio taxpayers to cover 92 percent of a $126 million project

 

That’s how corporate socialism works — taxpayers donate capital, while the owners keep the profits.

Congel, along with GE and others, should rely on the market to finance projects. If a project is sound, the market will finance it and, if not, why should taxpayers donate?

 

When the Monroe County industrial development agency gave Congel’s plan initial approval I asked for its due diligence. The county provided a thin report stating that if taxpayers finance the restoration Medley Centre’s sales would grow from $30 million annually to $420 million.

 

The report cover states that Congel commissioned it. Judy Seil, director of the agency which gives money to companies, confirmed that Congel paid for the report. Still, she insisted, the report is the county’s due diligence.

 

That’s how corporate socialism works. The poor may have to pass a drug test to get benefits but rich applicants write their own ticket.

 

My due diligence shows that total inflation-adjusted income in Monroe County fell by $2.5 billion, or 13 percent, from 2000 to 2008, the latest data. With such a steep drop in incomes it seems unlikely that Medley Centre sales could grow 14-fold.

That’s how corporate socialism works — ignore inconvenient facts.

 

WINNERS AND LOSERS

As for that proposed hotel, my analysis of county hotel tax data shows demand for lodging unchanged for two decades. If taxpayers finance Congel’s hotel it would either fail or almost certainly force an existing hotel or two out of business.

 

That’s how corporate socialism works — government, not the market, picks winners and losers.

Last November I warnedthat New York State taxpayers would have their pockets picked ever more thoroughly because of a decision by the state’s highest court

 

The majority acknowledged that the New York State constitution bans gifts to corporations. To get around this, the court ruled, tax dollars can be funneled through a government economic development agency like the one Seil runs.

 

That’s how corporate socialism works — ignore inconvenient laws.

Because New York had one of the strongest prohibitions among the 50 state constitutions, this ruling shows how easily corporations can plunder state treasuries.

New taxes to pay for stadiums for team owners, billion-dollar-plus gifts for building factories and the pocketing by 2,700 companies of state income taxes paid by their workers have become common

 

That’s how corporate socialism works — divert money from schools and other public services to company coffers.

 

The 50 New Yorkers from libertarians to liberal Democrats who brought the case asked for a rehearing, citing serious factual errors in the high court’s decision

 

The court not only denied the request, it also imposed $100 for court costs. Attorney James Ostrowski of Buffalo, who represented the plaintiffs, called that a gratuitous “slap in the face of people who litigated a matter of vital public interest on a shoestring budget.”

 

That’s how corporate socialism works — penalize anyone with the temerity to fight being taxed to give to the already rich.

 

Congel may never get $250 million of taxes, but if he does it will cost taxpayers whether they visit his mall or not, while weakening or destroying existing local businesses.

 

That’s how corporate socialism works — privatize gains, socialize losses and destroy competitors who do not get subsidies.

 

[nuke'em ttg]

breakit down who am i pissed at?

[SEC=UGA]

breakit down who am i pissed at?

 

 

Yer parents and god.

[westvirginia]

This is about the same as imminent domain BS. When a legislature controls what is bought and sold the first things to be bought and sold are legislators (or county commissioners, city councilors, etc). Politicians are cucksockers...

[Clubfoothead]

I though state and local governments were the solution?

[delusions of grandeur]

I though state and local governments were the solution?

 

well, of course any level of government is subject to corruption and special interests running amok, especially when it's citizens are apathetic about doing anything about it... However, you're not exactly making the case that a centralized government is going to be any less rife for corruption or somehow more accountable. They're the largest offenders of bowing down to the "too big too fail" corporations, and it's much more difficult to curtail that at a federal level.

 

An example I like to use is how several counties in metro-Atlanta were able to overturn the absurd ban on Sunday alcohol sales. If it had even been a state-wide vote, then there was more chance that the religious right would have the numbers to strike it down. If it had been at the federal level, I suppose you'd actually need an amendment to prohibit bans like this.

 

However, because it was local, the overturning passed easily, because the majorities in those communities felt differently.

 

Similarly, it is far easier to demand these kind of changes at the local and state level, where gaining a majority and/or forcing the polician's hands is actually possible... Oppositely, the amount of support you'd need at the federal level to make any kind of real change is nearly unattainable, without serious nation-wide outrage to force their hands to change.

 

Again, no level of government is going to be desirable if it's just allowed to be hijacked by interests, but the stark difference is the accountability to it's constituents and the ability to change unjust laws.

[westvirginia]

Again DoG - When you wrestle with a pig, you both get dirty. But the pig, he likes it.

 

Let me put it another way: Never argue with an idiot. They drag you down to their level and beat you with experience.

[Big John]

Never argue with an idiot. They drag you down to their level and beat you with experience.

See Hat Trick's sig

[bushwacked]

WV is DoG's lap dog now since Perch and Az aren't posting in the TG anymore.

 

[delusions of grandeur]

Again DoG - When you wrestle with a pig, you both get dirty. But the pig, he likes it.

 

Let me put it another way: Never argue with an idiot. They drag you down to their level and beat you with experience.

I hear ya, and I'm through playing gotcha pissing matches like that other thread (and how it always turns out when buttwhacked is involved), but I see all too often the misconception that returning rights to the states is only going to lead to tyranny on smaller scales. That most certainly doesn't have to be the case and actually makes it possible to combat.

 

Regardless of the level of government and your ideology, it comes down to this: "All it takes for evil to prevail is for good men to do nothing". That's obviously the problem here, not ideology...

 

But if I really wanted to get in a pissing match, I'd just bring up the fact that Obama and the neocons support this same corporate welfare, while those advocating for states rights actually want to hold them accountable and let them sink or swim, rather than funding and enabling their misdeeds.

[delusions of grandeur]

It's really is driving you crazy that no one will take your stinky bait anymore, isn't it?

[bushwacked]

It's driving me crazy, because I take this stuff seriously. I'm in the middle of drafting a 1,000 word PM for you expressing my outrage.

[delusions of grandeur]

It's driving me crazy, because I take this stuff seriously. I'm in the middle of drafting a 1,000 word PM for you expressing my outrage.

Well, at least we'll always have the good old days when I still gave a enough of a crap to dispute your partisan trolling and innaccurate statements.... You're already doing a bangup job making threads unreadable without having to troll me into pissing matches, so it should be no worry to you...

 

One would have hoped that DMD's breakdown of that ridiculous locked thread would be introspective for you, but trollers gonna troll I guess... Have fun buttercup, cuz you ain't worth getting riled up over...

[bushwacked]

Who are you?

[Chargerz]

I'm waiting for the followup thread entitled, "Mudder".

[Big John]

I'm waiting for the followup thread entitled, "Mudder".

THat would by SteelBunz and her home improvements.

[Savage Beatings]

I'm waiting for the followup thread entitled, "Mudder".