On the campaign trail, California’s Republican Senate nominee Carly Fiorina has repeatedly defended the decision to outsource thousands of jobs that tech giant Hewlett-Packard made while she was its CEO. “During my time at Hewlett Packard, yes, I had to make some tough choices like families and businesses all across California are making tough choices. China is fighting for our jobs,” she said.
But at the same time that she was shipping positions overseas — and HP was raking in billions in profits — Fiorina also claimed California tax credits meant to encourage start-up companies to invest in manufacturing equipment (and presumably create jobs here in the U.S.):
While Fiorina was chief executive of the computer giant, the state was hospitable enough to grant the company a controversial $13-million tax refund even though, state officials said, it had already used credits to offset some income tax bills…HP was awarded $13 million in 2005, when the company posted net earnings of $2.5 billion. That year, California faced a $6-billion budget gap and slashed funding for public health programs, education and law enforcement. In asking for the rebates, the companies cited provisions of a law that state officials said were designed to encourage small start-ups to invest in manufacturing equipment.
Considering that it was founded in 1939, HP calling itself a start-up is obviously a bit of a stretch. According to the Los Angeles Times, “in years before the vote, Hewlett-Packard made $20,000 in political donations to the four members of the five-member Board of Equalization who approved the tax relief,” which may have greased the skids a bit.
This credit is California’s version of a problem plaguing the tax code at the federal level: the proliferation of credits and handouts to mature, profitable companies. Of course, there’s nothing wrong with trying to incentivize actual start-up industries, but there’s no reason to be giving companies that can clearly stand on their own two feet taxpayer money, particularly when states and the federal government are facing their own severe fiscal constraints.
Nowadays, Fiorina spends a healthy portion of her time bashing her state’s economic policies, telling CNBC’s Larry Kudlow, “the facts are we’re destroying jobs in this state through bad government policy.” But during her tenure as CEO, Fiorina clearly had no qualms about accepting tax credits meant to create and preserve jobs and then shipping positions overseas anyway. I guess we should expect nothing less from someone who refers to outsourcing as “right-shoring.”