Conservative Index Add
pagetitle

Sunday, July 5th, 2020Last Update: Thursday, June 25th, 2020 07:51:39 AM

Compact to Stop Corporate Handouts

By: Constitution Staff

Government support for businesses through subsidies and other special treatment, commonly referred to as corporate welfare, has proven time and again to be an ineffective use of taxpayer dollars. But the practice persists, with policymakers claiming they cannot give up these “tools” to compete with other states for business development. “Multilateral Disarmament: A State Compact to End Corporate Welfare,” a study published by the Mackinac Center for Public Policy and 1889 Institute, proposes a solution to this “collective action” problem and shows how states can join together to end corporate handouts once and for all.

The complexity of state tax systems make it challenging to pinpoint exactly what corporate welfare is. This study takes care to define it properly, describing it as “any financial benefit purposely granted by government to a specific business or class of business and that is not generally available to all businesses and taxpayers.” The most common types of corporate welfare are also identified, as well as what should not be considered corporate welfare. These definitions are important so as not to confuse good tax policy with harmful corporate welfare.

“Government favors for big corporations, whether through outright grants or tax privileges, are an economic drag; calling this ‘economic development’ in a country as developed as the U.S. is utter nonsense,” said Byron Schlomach, director of the 1889 Institute and one of the study’s three authors.

The study also ranks the states by the amount of corporate welfare they hand out. The states with the most corporate welfare, as measured as a percent of state GDP, are Alaska, Kentucky, Louisiana, Michigan and Hawaii. Oklahoma ranks 9th among the states in the percentage of its state GDP handed out as corporate welfare, a dubious position to be in, but nevertheless, already in the top 10.

An important element of the study is a proposed state “cease-fire” agreement, a compact which states would join and agree together not to offer corporate handouts. The compact would go into effect once a certain number of states signed on. This helps mitigate the collective action problem of states not wanting to “jump first” to ban corporate handouts for fear that they’d surrender their competitive edge to other states. If states would join together, it is possible that corporate welfare could be eliminated altogether.

“Instead of competing for the best quality of life and business climate, lawmakers use corporate welfare as a shortcut to make it look like their state is doing well. Our compact gets states to work together to compete on the things that matter to residents in lieu of their race to hand out the most taxpayer money to select companies,” said James Hohman, director of fiscal policy at the Mackinac Center and co-author of the study.

The 1889 Institute is an Oklahoma think tank committed to independent, principled state policy fostering limited and responsible government, free enterprise and a robust civil society. The publication, “Multilateral Disarmament: A State Compact to End Corporate Welfare” can be found on the nonprofit’s website at:

https://1889institute.org/corporate-welfare-1

Other Stories From Spring 2019 Issue

2020 Oklahoma Conservative Index

Constitution Staff
The Oklahoma Constitution presents the 42nd annual Oklahoma Conservative Index rating our state...

Tidbits for Spring 2019

Constitution Staff
Democrats Select Wisconsin for ConventionIn March, Democrats selected Milwaukee to host their 2...

Letters to the Editor for Spring 2019

Constitution Staff
PET RATTLESNAKESIf there is one truth in life it is the fact that you cannot make a pet out of a...

No More Mr. GOP

Richard Engle
Many years ago when I was still young enough to be a Young Republican, I served as State Chair of...

The Duty to Abolish Abortion: We are Without Excuse

John Michener
The movement to abolish abortion has finally reached critical mass. Enough concerned and educated...

Stitts Strong Start

Tim Bakamjian
In his January 14th inaugural address, Governor Kevin Stitt outlined a clear set of goals for his...

The Expanding Role of K-12 Public Schools

Linda Murphy
The expanding role of social services and social change in K-12 schools should be closely examined....

Oklahomas Dismal Public Education Ranking

Byron Schlomach
Governor Stitt has made it his goal to move Oklahoma toward top ten status among the states. Exactly...

The True Meaning of the Constitutions Cruel & Unusual Punishment Clause

Bill Graves
1. The Framers Meaning of Cruel and Unusual PunishmentThe Constitutions Eighth Amendment p...

The Federal Page for Spring 2019

Theodore King
National Debt Now Exceeds 22 TrillionOn February 12, the United States Treasury Department repor...

Is the University of Oklahoma a Racist Institution?

David Deming
The University of Oklahoma is apparently becoming infamous as a hotbed of racism. In 2015, a video...

Conversion Therapy Bill is Totalitarian

Steve Byas
When it comes to abortion, the relationship between the physician (i.e. the abortionist) and...

Compact to Stop Corporate Handouts

Constitution Staff
Government support for businesses through subsidies and other special treatment, commonly referred...

State General Revenue Fund Collections above Estimate

Constitution Staff
State General Revenue Fund (GRF) collections in March were $508.9 million and came in at $31.8...

In The News

Constitution Staff

Oklahoma Presidential Primary Election
Oklahoma was among14 states holding Presidential Primary Elections on March 3, 2020 in what is known...

Constitution Staff

Statewide Races and Congressional Seats on Ballot
In 2020, the Oklahoma candidate filing period was April 8-10. Due to the COVID-19 pandemic, ...

Constitution Staff

Republicans Will Retain Control of Legislature
The candidate filing period for the Oklahoma Legislature this year was April 8-10. Due to the COVID...

Constitution Staff

Legislature Considers Bills
The Oklahoma Legislature went into its annual mid-session recess on March 18, which coincides with...

Constitution Staff

Oklahoma Legislators Rated
The Oklahoma Constitution presents the 42nd annual Oklahoma Conservative Index rating our state...

Constitution Columnists

Ron McWhirter

Covid-19 Impacts the 2020 Oklahoma Conservative Index
We believe the most important product of this publication is our annual Oklahoma Conservative Index...

Steve Byas

Jim Inhofe
Perhaps another person could take his place and do an even better job than Jim Inhofe, but I...

Linda Murphy

Oklahoma Education, Covid and Global Control
Since Spring Break, the public schools have been closed due to COVID 19, bringing children and their...

© 2001 - 2009 The Oklahoma Constitution, all rights reserved.
Contact the Oklahoma Constitution by calling 405-366-1125 or emailing okconsti@aol.com
Content Management System (CMS) provided by WebTeks CMS.