The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Corporate Tax Breaks Do NOT Create Jobs

Nov 23, 2009

The State of Michigan granted a new 2.6 million dollars a year tax break to General Motors, supposedly for “keeping” jobs at its headquarters in the Renaissance Center in downtown Detroit.

Actually, GM is cutting at least 1,500 of its 4,000 jobs, moving some to its Tech Center in the outlying suburb of Warren.

When GM moved its headquarters to the “RenCen,” it had to unload an old, obsolete building. The state provided financing to the real estate company that bought the building – only to then pay that same company to lease the building back!

The state also provided a tax break of 8.3 million dollars for GM’s new RenCen parking garage. And it spent more than 140 million dollars to fix roads in the area. It granted tax-free “Renaissance Zone” status to part of the RenCen so that GM could move in EDS, which does GM computer work. The state also gave GM a similar exemption to develop an area along Detroit’s river.

Officials argue that tax breaks like these create jobs. Complete bunk! A recent report for the Detroit City Council found that companies granted tax breaks had not lived up to their promises to create jobs. On the contrary, the companies laid off at least 7,500 workers in the last decade. The two biggest violators were General Motors and Chrysler. General Motors came up 2,500 jobs short at its Poletown plant. Chrysler was 4,800 jobs short at eight sites.

And the Bing Group, owned by Detroit Mayor Dave Bing, fell short at four of six sites receiving tax breaks from the city last year.

It’s not just GM and Chrysler and the state of Michigan where this game is played. It’s everywhere. New London, Connecticut used “eminent domain” to take over an entire neighborhood, kicking homeowners out, when Pfizer wanted to build its headquarters nearby. Pfizer was also given huge tax breaks. Eight years later, Pfizer is pulling out.

The corporations threaten, “If you don’t give us what we want, we’ll move.” Then they move anyway, and the local residents wind up taking a bigger loss. It shows you might as well fight because, even if you lost, you wouldn’t lose more. And you always have a chance of winning.