There Is No Budget Crisis—Only Capitalist Theft

Sep 28, 2009

At a recent protest rally, over 1000 city workers, bus riders and supporters circled the Coleman Young Municipal Building in Detroit. A retired city worker observed: “Isn’t it peculiar. All these government agencies–the city, the county, the state, and schools–all say they have a deficit. They say workers have to give up because of the deficit. It’s like they got together and planned this thing.”

They didn’t need to plan it. This was just business as usual in this capitalist economy. Wealth is exploited from workers and transferred to the wealthiest one% every day. And the state budget is always used to take tax money from us and give to the corporations.

What is different today is the worldwide economic crisis, which exacerbates capitalism’s drive for profit. Today public services are cut to the bone and beyond, education is cut, social services are cut–all under the pretext of a budget deficit.

We Pay for Crisis

It’s true there are massive “deficits.” But workers and people who need public services did not create these massive deficits. Government policies of tax breaks and hand-outs to corporations DID.

According to the federal Government Accounting Office, from 1998 to 2005–a time of high profits–roughly two thirds of all U.S. corporations paid ZERO income taxes. What big corporations didn’t pay created the deficit–and the deficit was used to justify cuts in social programs and public services.

Even when corporations DO pay taxes, on average they pay less than 5% of their net income in taxes. The equivalent would be a worker making $30,000 a year and getting to keep $28,500 of that income. Not bad.

Corporate tax breaks go primarily to the biggest corporations and are doled out from several levels of government.

In Michigan alone, the amount of tax breaks at the level of the state government is over 35 billion dollars a year. This is bigger than the ENTIRE state budget. By the estimates of some politicians, just eliminating 4% of the tax breaks would balance the state budget. (Not all of this is tax breaks to corporations, but a good chunk of it is).

Meijer & GM Take Billions

Look at the case of retail giant Meijer. It is building a new store in Detroit. In 2007, the State of Michigan gave “tax breaks and incentives” to develop what was then described as “an unused parcel at the corner” of the State Fairgrounds. Detroit City Council passed tax breaks for that same “parcel”. It turns out that Meijer will be the anchor store on that “unused parcel at the corner,” and the recipient of those big tax breaks.

During 2007, when Michigan state offices were shut as a way to scare people about the “budget deficit,” the Traverse City Record-Eagle reported:

State lawmakers gave Meijer Inc. an $8.5 million [yearly] tax break.... Meijer wasn’t the only special interest to receive a targeted tax break. New car dealers, professional sports stadiums, Michigan International Speedway, banks and the insurance industry all received special credits.”

For another look at corporate tax breaks, just glance at General Motors. Hidden in the federal bail-out package were enormous give-aways. According to the Associated Press (May 2009):

“The government bailout of General Motors includes a … tax break that could save GM and its future investors more than 12 BILLION dollars” when it becomes profitable again.

There’s more!

In June 2009, GM got 100 million dollars from Orion Township and 779 million dollars from the State of Michigan for its Orion Township plant.

And while details are undecided, GM has been offered 12 to 15 years TAX FREE at its Renaissance Center headquarters by Detroit and Wayne County.

In a bidding war, the city of Warren offered GM 30 years TAX FREE if they would move the GM headquarters from Detroit to the city of Warren.

Don’t be surprised if GM moves a few departments around between Detroit and Warren and manages to claim some version of BOTH tax breaks!

None of this is new. And it doesn’t happen just in Detroit or just in Warren or just in Michigan. Under Republicans AND Democrats, tax breaks given to big business and the wealthy keep growing.

Pretending to Create Jobs to Give Away Money

For the past 14 years, Michigan has given away 3.3 billion dollars in tax credits through its Michigan Economic Development Corporation. On top of THAT, Michigan spent 1.6 billion dollars in grants. Of course, the state always claimed jobs were to be created.

That’s a lot of bull–even according to The Wall Street Journal. The Journal showed that for every 100 of the jobs that were promised to be created or maintained, only 29 arrived by the end of 14 years. Of all new jobs, only ¼ of one% of jobs created in 10 years time were the direct result of these incentives.

All of these give-aways add up. Back in 1990, the share of state and local tax revenue coming from corporate income taxes was 16%. Today it is 8%. Were ordinary people’s taxes cut in half over that same period? No. We made up that difference in additional fees and taxes we pay–and in the destruction of public services.

If it weren’t for the funneling of public money to private corporations, we could have better roads, better schools, better public transportation and better water systems.

So when state and city governments say that they have no choice, that their budget deficit requires public workers to sacrifice and give up concessions, tell them where to shove it! More sacrifices by workers will only be used to give out more corporate tax breaks.

That’s why the small signs of resistance we have seen from teachers, city and state workers and Ford workers in recent months are important. There can be CHANGE–IF this resistance can spread.