The subsidy bonanza sunk costs

  • Article by: ARTHUR ROLNICK and MIKE MEYERS
  • Updated: February 2, 2013 - 8:39 PM

A 'Capitalism Cleansing Act' could end corporate welfare as we know it. Here's the problem, and the plan.

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ti1310Feb. 2, 1310:49 PM

hmmmm a novel approach, But I cant see congress with the sea of lobbyists and their cash, putting this into law.

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texas_technomanFeb. 3, 13 5:05 AM

In many cases no jobs are actually "created", instead companies accept large subsidies to move from one state to another...moving with them some or all of the jobs, and some or all of the employees. It's a shell game. I lived in Texas for 20 years (up until a year ago) and watched it happen. That is the "job creation" scam that Gov. Perry brags about. And still Mn has a lower unemployment rate!

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phatcatpatFeb. 3, 13 7:54 AM

The term "corporate welfare" is another liberal word game that leads the uniformed to believe that corporations are being subsidized with our tax dollars. They are not. Paying less taxes than the liberals wants is now a subsidy. We all of us subsidized under the Bush tax cuts? Hardly. The government took less of OUR money. Liberals still can't figure out that the government has no money unless it takes it (confiscates) it from us.

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trice01Feb. 3, 13 9:39 AM

Interesting article that makes some valid points aside from its rather silly premise. A central question is how you define subsidy. If you're talking cash in the hand, of course it's absurd to give private business cash grants. This hasn't, however, discouraged MN politicians to hand billions to private concerns in order to secure political payback, i.e. Target Field, Vikings stadium, and the light rail lines. If you're talking tax relief, that's a different discussion. It's a fact that a number of major employers have fled the state due to the business climate, many of whom just crossed the St Croix River to lighten their load. I can't help but laugh at the irony of this article's origins at the U of Minnesota. Talk about subsidies. This is an institution that has never operated within its revenues in the 40-odd years I've been around, and comes begging to the Legislature every session for enormous handouts. Their rationale? The threat that students will flee Minnesota for Indiana or Mississippi if we fail to pay out millions for new dorms, new stadiums, and pay professors a couple hundred grand per year (sometimes while they're still on the payroll of universities in other states!). Talk about a money-sucking scam!

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jjsbrwFeb. 3, 1310:02 AM

phatcatpatFeb. 3, 137:54 AMThe term "corporate welfare" is another liberal word game that leads the uniformed to believe that corporations are being subsidized with our tax dollars. They are not. Paying less taxes than the liberals wants is now a subsidy------------------------------------------ just so I understand your point. Giving the Vikings $450 million for a stadium is NOT a subsidy? I missed something.

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elmore1Feb. 3, 1310:03 AM

Interesting perspective. It is a double edged sword because the Libs are always interested if this results in union jobs (their biggest special interest group). I would also add "stupid spending on public sector welfare" into the topic. The state ponies up 200mm for the TCF stadium at the U when there is no logical reason why they couldn't have partered with the Vikings with one solution and saved everyone a lot of money. We build a gold plated bridge from Wisconsin...You get the idea. Plenty of opportunities in both private and public sector...

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briechersFeb. 3, 1310:05 AM

I think you have only scratched the surface, but keep scratching. In 2009, GE had a before tax income of $9.9 billion. They had an after tax income of $11.0 billion. That’s right…their taxes added to their income. Assuming they were supposed to pay taxes of around $3.5 billion, they appear to have received subsidies of $4.6 billion. Cronyism is not capitalism. What most people fail to understand is this. Companies are often only strong advocates of free markets when some other company has solicited a government-connected advantage. Companies will nearly always take freebies from the government or support regulation that gives them an advantage. The primary beneficiaries of free markets and capitalism are consumers via millions of pricing signals back to companies that force them to lower prices or increase quality of products and services…or go out of business. Capitalism serves consumers and creates jobs in the process. Companies support capitalism because it is the second best deal they can get after cronyism.

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alansonFeb. 3, 1310:22 AM

The biggest corporate subsidy in Minnesota is the huge amount of public money paid to private entities to administer public health programs. Everything else is peanuts. Even the "People's Stadium" (the yet-to-be corporate-named Vikings playground), Target Field, Target Center and the Excel Center pale in comparison. Of course, none of these were mentioned by the authors of this commentary.

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unclemushyFeb. 3, 1310:29 AM

jjsbrw - No one is giving the Vikings 450 million. Nice try, but read the details.

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trice01Feb. 3, 1311:13 AM

uncle- unless there's something yet to be revealed, it appears that virtually all of the Vikings' "contributions" are promised from future revenue streams and stadium naming rights, with none actually coming out of the pockets of the Wilf family.

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