April 13, 2010; Sierra Vista Herald | Nonprofit Quarterly readers are invited to read this newswire as an intemperate, frustrated rant. Every week we cover news items concerning states and municipalities trying to eke nickels and dimes of revenues from tax-exempt entities (student taxes, bed or patient taxes, payments in lieu of taxes, registration fees, and so many more). It’s as though state legislators and city council members imagine the nonprofit sector is brimming with surplus cash, hoarding dollars so that vital services will starve and taxpayers will be slammed.
The truth is this: State and local governments (and the feds) give away far more as tax abatements and tax subsidies to the business sector, not even counting the nation’s recent bank, insurance, and automobile bail-outs, than they ever forego in taxes or fees to nonprofits. What is particularly galling is to see state government crying the budget blues, cutting services to the poor, taking aim at nonprofits for increased fees, and all the while giving away more to the corporate sector.
Take Arizona, whose budget slashes aimed at nonprofit providers have been covered here on our Web site. The Arizona Senate Finance Committee just voted five to two, on straight party lines, to send a Republican package of business tax cuts, already approved by the House, to the full Senate for a vote. The Republican sponsor of the bill says that the cuts will generate jobs, and fix Arizona’s “broken…economic model,” and make the state “more business friendly [and] more competitive for capital investment.”
The Democrats have declared the bill fiscally irresponsible. The current bill will cost the state $270 million in foregone revenues in its first three years, starting at $60 million in the first year, rising to $647 million lost annually as of 2017.
The real story? According to a very informative fact sheet from the Arizona Budget Coalition [PDF], only 2 percent of the tax cuts are related to job growth, the remaining 98 percent or $2 billion in corporate giveaways over the next 8 years is not intended to generate a single paycheck. Is Arizona unfriendly to business? The Coalition’s analysis cites a report from the conservative American Legislative Exchange Council ranking Arizona as the third business-friendliest state in the nation.
Pre-bailout, pre-stimulus, in fiscal year 2006, according to the libertarian Cato Institute, the federal government gave out a mere $92 billion in direct and indirect subsidies to private business. Add states, counties, and municipalities to the array of governmental entities giving businesses taxpayer-funded goodies, and you know the result: a nationwide pattern of corporate welfare that dwarfs any foregone revenues that governments might be able to squeeze out of the nonprofit sector.
It’s long past the time for the nonprofit sector to tally the score correctly, to show quantitatively, empirically the size of the giveaways that benefit for-profit corporations often without a scintilla of benefit to people in need.—Rick Cohen