Corporate Welfare: Corporations Pocketing State Taxes Paid By Workers

Well, it’s almost that time of year again: tax day. A day once set aside in recent years for patriotic right-wing activists, to voice their displeasure in a most rousing fashion, their disgust for runaway government spending. Speaking of which, here’s a little tidbit very few seem to be protesting.  As David Cay Johnson writes, in at least 16 states, taxpayers are having their tax dollars pocketed by wealthy corporations. I don’t know about you, but at a time when wages are stagnant, coupled with the slow crawling economic not-so-jobless recovery. I think it’s safe to say that workers may be a highly pissed to know that the fruit of their labor is being pocketed by the greedy corporate machines for whom they toil for peanuts, with the full blessings of the government.

Yep, so much for corporations being people, right?

Across the United States more than 2,700 companies are collecting state income taxes from hundreds of thousands of workers – and are keeping the money with the states’ approval, says an eye-opening report published on Thursday.

The report from Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations, identifies 16 states that let companies divert some or all of the state income taxes deducted from workers’ paychecks. None of the states requires notifying the workers, whose withholdings are treated as taxes they paid.

General Electric, Goldman Sachs, Procter & Gamble, Chrysler, Ford, General Motors and AMC Theatres enjoy deals to keep state taxes deducted from their workers’ paychecks, the report shows. Foreign companies also enjoy such arrangements, including Electrolux, Nissan, Toyota and a host of Canadian, Japanese and European banks, Good Jobs First says.

Why do state governments do this? Public records show that large companies often pay little or no state income tax in states where they have large operations, as this column has documented. Some companies get discounts on property, sales and other taxes. So how to provide even more subsidies without writing a check? Simple. Let corporations keep the state income taxes deducted from their workers’ paychecks for up to 25 years.

It was not always this way. Letting companies keep their workers’ state taxes apparently began in Kentucky two decades ago as a way to retain jobs.

Taxation and fairness will be the big conversation this week given pending votes on president Obama’s Buffett Rule – a measure that is marginal at best when it comes to having a long-term positive impact on deficit reduction. Current polls indicate that a majority of Americans support the idea of wealthy millionaires and billionaires paying their fair share in taxes. No word on just how they may feel about the corporate welfare program currently enjoyed by corporations who hardly pay their fair share in taxes. So how does this program work? Well, read on:

Yep, Blame Obama For Everything!

Deals cut with the states over the past two decades diverted $5.5 billion from public purposes to private gain, the report says. Close to $700 million more was diverted last year, Good Jobs First estimates.

New Jersey approved $73.2 million in new deals in 2011 on top of $178 million diverted that year alone under previous deals. I calculate that at nearly $80 per household in corporate welfare based on New Jersey’s 3.1 million households.

These deals typify corporate socialism, in which business gains are privatized and costs socialized. They also mean government picks winners and losers, interfering with competitive markets. Leaders in both parties embrace these giveaways because they draw campaign donations from corporate interests and votes from people who do not understand that they are subsidizing huge companies.

Yep, paying to play has long been the order of the day. However, this sounds like workers paying a fee for employment. You know, sorta like that  crime punishable by jail time known as blackmail?