State and local governments issued at least eight separate $1 billion subsidy packages to major corporations in 2022, thanks in part to federal COVID-19 spending, according to analysis by the nonprofit think tank Good Jobs First, The Wall Street Journal reported Tuesday.
State governments — which have amassed a record-breaking $136.8 billion in cash reserves thanks in part to COVID-19 stimulus funds — are typically restricted from using federal funds for corporate tax credits, according to the WSJ. However, they are usually able to pay other expenditures using those funds, leaving state money to offer for subsidies.
Companies have been bringing factories for electric vehicles, batteries and computer chips to the U.S. amid rising tensions with China and significant federal tax credits, the WSJ reported. Good Jobs First estimates that each job created will cost taxpayers more than $308,000 in subsidies, as states compete to attract projects. (RELATED: The US Could End Up Handing Out Huge Tax Breaks For Foreign EVs)
Governments in Georgia, Michigan and West Virginia are among those offering these massive subsidies, the WSJ reported.
Look, I’m a capitalist. But the wealthiest and biggest corporations need to pay their fair share.
Thankfully now, because of the law I signed, billion-dollar companies have to pay a minimum 15 percent in taxes.
— President Biden (@POTUS) February 12, 2023
President Joe Biden recently touted the fact that his signature Inflation Reduction Act (IRA) would implement a 15% minimum corporate tax rate, making corporations pay their “fair share,” at his State of The Union address in early February. The IRA was initially projected to offer roughly $30 billion in subsidies by the Congressional Budget Office, but private sector analysts now estimate that the bill will offer at least $136 billion in subsidies following a spike in domestic manufacturing investments.
In exchange for a portion of roughly $7.5 billion in federal subsidies, the Biden Administration recently struck a deal with electric vehicle giant Tesla to make nearly half of its 17,000 electric vehicle charging stations accessible by other brands. The Biden administration’s Bipartisan Infrastructure Law has set aside nearly $25 billion to subsidize the development of electric vehicle infrastructure, with a goal for the U.S. to have 500,000 such chargers available nationwide by 2030, according to a White House fact sheet.
While mega-deals are climbing, so too are relatively smaller deals of $50 million or more, the WSJ reported. States and cities offered 23 such deals in 2022, the highest level in seven years, but this number does not include the significant breaks offered by both the Inflation Reduction Act and the Chips and Science Act.
In many cases, state lawmakers are unaware of which company they are offering subsidies to, the WSJ reported. Business negotiators tend to hide their clients’ identities to prevent information about their interests leaking to the press.
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