Goldman Sachs is one of the U.S.’s most profitable companies, making, in the last three years, profits of $13.9 billion, $8.5 billion, and $4.4 billion, even as the country grappled with the effects of the Great Recession. But despite these sky-high profits, the state of Utah is still seeing fit to give the mega-bank tens of millions of dollars to create jobs:
Goldman will receive an estimated $47.3 million from Utah over a 20-year period in the form of a 30 percent tax rebate, according to Governor’s Office of Economic Development.
In exchange, the bank agreed to maintain at least 1,065 employees in Salt Lake City and pay them at least 150 percent of the average local county salary.
State legislatures can’t seem to help themselves when it comes to doling out tax breaks in order to create or preserve jobs, but the history of such policy should act as a warning. For instance, Illinois doled out millions in subsidies to Sears, only to have the retailer layoff 100 workers last month. Boeing not only received a slew of tax credits from Wichita, Kansas, but had Kansas lawmakers lobby for it to receive billions in federal contracts: the company will leave Wichita at the end of 2013, costing thousands of jobs.
And the list goes on and on. The Des Moines Register found that “15 [Iowa] companies enjoying tax credit dollars given to them by the state have defaulted on the job-creation requirements tied to those credits.” Louisiana doles out hundreds of millions in tax credits to businesses, with no clue as to whether or not they create jobs.
As Citizens for Tax Justice noted, “the reasons for these failures should be obvious. When the economy is weak, businesses generally can’t sell as much of their product as they used to. You can throw money at them and ask them to hire more people, but ultimately it doesn’t make sense for a company to bring on more employees unless there’s some new, unmet demand that needs to be filled.” But states continue to try this failed strategy, with Utah giving a humongous investment bank millions of dollars in the hopes that it will bring some of “god’s work” to the Beehive State. (HT: Jess Kutch)