Corporate Tax Dodging and the Myth of Job Creation

What do Wal-Mart, Dell, Fidelity Investments and Boeing have in common? They're all part of a $50 billion dollar-a-year scam in which corporations play states and cities against each other to win hefty taxpayers subsidies in the name of job creation.

But do they provide more jobs, higher wages or improved living standards? A new book says otherwise. We are joined now by Greg Leroy, author of "The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation." He is director of the non-profit Good Jobs First.

• Greg Leroy, author of "The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation" and director of the non-profit Good Jobs First.

AMY GOODMAN: We are joined by Greg Leroy, author of The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation. He's Director of the non-profit Good Jobs First. We welcome you to Democracy Now!

GREG LEROY: Thanks, Amy. Thanks, Juan.

AMY GOODMAN: It's great to have you in our Washington studio. Why don't you lay out the premise of your book?

GREG LEROY: Sure. As you mentioned, it's a $50 billion a year scam. That's total spending by states and cities in the name of jobs. The average state subsidizes jobs more than 30 different ways now, and those subsidies are often granted by local bodies of government. The trouble is nobody's watching the store in too many cases. Companies get huge subsidies, in many cases to do exactly what they were going to do anyway, to go where they wanted to go, to lay off people, or to outsource, or to pay poverty wages, or bust a union, or privatize work anyway. And governments don't even enforce the promises made originally when companies say they're going to create x number of jobs or create x amount of additional tax revenue. So taxpayers are often losing twice or three times by losing jobs, not getting as much tax revenue as they promised, and losing tax revenue that could be really used to create good jobs through other means.

JUAN GONZALEZ: Well, how has it gotten to this stage, Greg? Many of us are familiar with the usual reports, x company was offered these job incentives because they were considering leaving to move somewhere else and, as a result of the job incentives, not only will the x number of jobs be created, but there will be multiplier effects that will create other jobs. But no one ever checks back five years later or ten years later to find out what actually happened, right?

GREG LEROY: Yes. Certainly the whole job blackmail dynamic you just described there is epidemic in many parts of the country. It's especially true in New York City, where dozens of companies, media companies, financial companies, insurance companies have threatened to leave the city and shaken down the city for eight and nine-figure packages. By threatening to run away to places like Jersey City or Greenwich, Connecticut.

The trouble is, when you go back and read the fine print of the contracts written by the city, giving the big tax breaks to allegedly retain the companies, you find that the contracts are Swiss cheese, that they give the companies lots of latitude to lay people off before triggering any kind of penalties. And the city isn't doing a good job monitoring, has historically not done a good job monitoring the outcomes.

But it's hardly unique to New York City. Companies like Raytheon did it to Massachusetts, ConAgra to Nebraska, Sears did it to Illinois. And then there's other dynamics, too. Pirating jobs with taxpayer money or moving jobs around with taxpayer money, like the case of Dell getting a massive package from the state of North Carolina, a package that could approach $300 million for a facility that will only cost about $100 million. The system has grown up over 50 years. {mosgoogle right}

There's a whole industry of site location consultants who specialize in keeping the process secret. At its core, the problem is that the corporate decision-making process really is a black box. We're not allowed to really understand how companies make their decision. Public officials are kept out of the process. They're deliberately kept in the dark so that public officials cannot cooperate in the interest of taxpayers. Governors cannot cooperate. Mayors cannot cooperate. And therefore, governments are played against each other. They're whipsawed, and we're all taken to the cleaners as taxpayers.

AMY GOODMAN: Greg Leroy, can you talk about Wal-Mart and the examples of how it has benefited by this, what you call, the Great American Jobs Scam?