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Did you know Wegmans saved $5.41 million on property taxes on its stores in New York state between 2003 and 2009? This is a company that had sales of $6.2 billion in 2011.

The data was contained in a New York Times database. The Times is in the midst of an awesome investigation into local and state subsidies for corporations. Guess what? These incentives, including grants, loans and property tax breaks, often provide dubious benefits.

The Times tallied $80 billion in giveaways every year to companies and believes the true total is far higher:

A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.

Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors.

While some jobs have certainly migrated overseas, many companies receiving incentives were not considering leaving the country, according to interviews and incentive data.

Despite their scale, state and local incentives have barely been part of the national debate on the economic crisis.

These subsidies are coming as local and state governments cut services and jobs and increase property taxes and fees.

I plugged in “Rochester” into the Times database. A sampling of companies getting breaks:

  • General Motors (Recently pulled out of Honeoye Falls, taking 300 jobs.)
  • PAETEC (Perinton telecom got $7.36 million in corporate income tax credits, rebates or reductions. PAETEC was sold to Windstream for $2.3 billion.)
  • Sibley Building (Rochester taxpayers took a $19 million haircut on that one.)
  • Gannett (The Democrat and Chronicle has repeatedly furloughed and laid off workers.)

7 Responses to Corporate Welfare Under Attack (Finally)

  1. December 1, 2012 at 8:44 pm Lee Drake responds:

    Property tax breaks wouldn’t be required if the property taxes weren’t so ridiculously high in the first place. Due to property tax breaks for a variety of reasons Rochester has attracted many businesses which would not otherwise be here. Are they always a good investment? Nope. Are they never a good idea? Nope. When a company looks at where to locate – every community on the face of the planet is competing for their business. Wouldn’t you rather they located and built here? I had a long discussion with the CFO of Kodak – around the same time as they were getting those tax breaks about where they were building. His statement? “Mostly out of state”. Why? “It costs us 1/2 as much to build out of state as in state – despite transportation and depot costs – and we can make more money because we can sell more things (wine, liquor, etc). Sales taxes are lower, income taxes are lower, property taxes are lower.

  2. I will plead ignorant as to the details of corporate welfare. As I read the accusations, I don’t know if corporations are actually being given money OR is it that they are being given a reduction in the amount of taxes to pay? If it is being given money, then that is wrong. If it is a reduction, then I don’t see that as corporate welfare. If they weren’t there, then there would be ZERO taxes collected and ZERO jobs. I would rather have them there providing jobs and services. What needs to be done is to eliminate these “games” and have a reasonable tax for businesses and a reasonable amount of spending by the government which relies on taxes to pay there bills. I will mention government wages, benefits and pensions as an example. Every year we read where local governments budgets are being decimated by the increase in pension contributions. We need jobs and businesses. If to be here they need a reduction in taxes paid, so be it. Call it corporate welfare. I call it lower taxes.

  3. Wow, oaj sure has taken the fox news and D&C propaganda (for being so liberal they sure do jump on public employees). Local government is a service provider, employee costs are going to be high. Garbage doesn’t pick itself up, bad guys don’t arrest themselves, fires don’t extinguish themselves it takes people, those people need to be paid. There are issues but hey are being corrected and exaggerated. Besides the city and county’s economic development is just a way for funneling money to friends. These “urban renewal” developments pay off friends that own construction. Retail tax breaks add little to the economy, we need manufacturing jobs. They create support jobs, they have a large ripple effect. Retail and many service businesses create low level jobs and would come here anyways. A store needs to be here to sell to us.

  4. I don’t know how much Wegmans “saved” in paying some minute portion of their overall property tax in NYS over the 6 yrs you mention, but if it 5.4M, thats nothing… mouse nuts.

    That is less than 1M a year across the state where they have likely 30+ stores and main location. Wegmans put more than 1M alone in the public roads around their new Greece store during that time. How much did they pay to improve roads around their other stores. Those road improvements were not only better for Wegmans. And I believe Bob Wegman also put over 10M in area schools and they pay how much to local charities?

    And while Wegmans certainly is not poor, 6B in revenue for a year in the Grocery business is not like 6B income at Xerox. The 6B in rev in the Grocery business is far less profitable per dollar of sales.

    Wegmans now builds out of state for a variety of reasons, one of which is —that is where the most money (profit, high income customers, prime marketplace etc are) Not just because of lower taxes, even though area taxes are way too high.

    But hey lets build some more artificial turf fields at our High Schools.

  5. December 3, 2012 at 11:59 am theodore kumlander responds:

    i wish some town or city would bribe me to come live there. maybe free water and a no interest mortgage and of course no taxs. maybe i should incorprate?

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