SUMMARY: Texas Governor Perry unwisely channeled $40 million of state aid to Toyota to move their HQ and 3,000 employees from California to Texas. New York Governor Cuomo just gave a solar company (a company with unproven technology that’s never netted a penny profit) over a billion dollars of taxpayer money.
Guess which governor the press castigated, and which one likely will be — if anything — praised by the MSM for his insightful expenditure of OPM.
Periodically liberal pundits dump on Texas and its governor Rick Perry for “stealing” liberal states’ businesses with subsidies. While I agree with the fundamental complaint — I think government should not be in the business of subsidizing businesses, or picking winners and losers — it’s fun to look at the double standard of these myopic critics when liberal governors do the same thing, with FAR more taxpayer dollars.
Consider the $40 million Texas subsidy for the Toyota HQ vs. the just announced ONE BILLION DOLLAR+ New York state subsidy for billionaire Elon Musk‘s unprofitable long-shot venture, SolarCity. Even if its successful (not likely), the taxpayer SolarCity subsidy the first five years comes to a whopping $103,000 per job, per year. Cuomo must be employing the new “core” math to make those numbers profitable for the state of NY.
As you probably recall, earlier this year Toyota announced it was abandoning Torrance, California — moving its headquarters and most of its high paying staff to the modern affluent city of Plano, Texas. Plano is a city with a quarter million people located outside of Dallas — the home for an increasing number of profitable big businesses.
Governor Perry’s policy of subsidizing such moved resulted in Toyota getting a windfall $40 million subsidy — quite a chunk of change — though less so when you look at the size of the company. Given that the company was committed to building a new $300 million HQ in Texas, obviously they were not leaving California for the subsidy. The subsidy might have been a significant factor that caused Toyota to pick Texas over other business friendly Midwestern states, but it did NOT entice them to leave California — doubtless Sacramento and the local Torrance governments provided the all needed “incentives” for Toyota to flee the Golden State.
In today’s WALL ST JOURNAL we get some details of the New York state subsidies to entice money-losing SolarCity to set up shop there. Rather than providing a “tax holiday” subsidy, NY is PAYING $750 million to build SolarCity a new factory. Plus providing free public housing (not sure how that benefits the company or its employees, but the progressive mind works in mysterious ways).
Often government subsidies consist of “tax holidays” — exempting favored companies from paying income, sales or property tax. Such is the case with both of these examples (NY far more, of course). The advantage of such holidays is that it requires no direct out-of-pocket taxpayer outlays.
But NY is actually PAYING for SolarCity’s factory. So if the company follows the business model of Solyndra and folds, NY taxpayers are stuck with an abandoned factory and little chance of recouping the governor’s generous gifts of taxpayer dollars.
No matter how bad a public policy can be (business subsidies in this case), liberals have the uncanny ability to make it FAR worse. Thanks for the demo, Governor Cuomo.