Texas Gives Away $19 Billion Each Year to Lure Business, More Than Any Other State

brint_ryan2.jpg
Accounting exec Brint Ryan provides much of the grease that helps keep Texas' incentive engine running smoothly.
Over the weekend, the New York Times took a hard look at the tax breaks and other incentives state and local governments dole out by the billions to lure businesses. As the magnitude of those gifts has increased over the years, corporations have learned to shop for the most lucrative deal, dangling the promise of jobs and an economic boost to convince state and local governments to gut themselves of future revenue.

Sniffing out those incentives has become a business in itself, and nowhere is that business booming like in Texas. The Times calculated that the state hands out $19.1 billion per year in business incentives, mostly in the form of property tax breaks or sales tax rebates. That comes out to $759 for every man, woman, and child in the state.

State officials justify the largesse by pointing out that Texas is home to half of all the private sector jobs created over the last decade nationwide, the Times reports.

Yet the raw numbers mask a more complicated reality behind the flood of incentives, the examination shows, and raise questions about who benefits more, the businesses or the people of Texas.

Along with the huge job growth, the state has the third-highest proportion of hourly jobs paying at or below minimum wage. And despite its low level of unemployment, Texas has the 11th-highest poverty rate among states.

"While economic development is the mantra of most officials, there's a question of when does economic development end and corporate welfare begin," said Dale Craymer, the president of the Texas Taxpayers and Research Association, a group supported by business that favors incentives programs.

Businesses in these cases argue they bring economic development -- and therefore tax revenue -- that would not otherwise exist, justifying the incentives. Then again, particularly during the recession, businesses have raked in cash while local school districts have struggled under draconian funding cuts.

Then there's the question of whether the businesses are in it for the long haul. The Times examines the case of Amazon, which last year closed a distribution plant in Irving after winning major incentives just six years before. What drove it away? The state's attempt to collect $269 million in sales tax.

And this wouldn't be Rick Perry's Texas without hints of cronyism and conflict of interest. At the center of the incentives boom is Dallasite and former City Council candidate G. Brint Ryan, whose namesake company represents Exxon Mobil, Raytheon, and scores of other firms seeking incentives in Texas and elsewhere. He's a regular at the office of Comptroller Susan Combs, to whose campaign he and his employees have given more than $600,000, and he and his wife have given more than $4 million in political donations in the past dozen years. Several Perry administration officials and current and former lawmakers have found their way onto the Ryan, Inc. payroll.

The takeaway: Whether incentive deals are a net positive for the people of Texas is a fun debate, but there's no debating that it's huge corporations and their lobbyists who benefit the most.

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31 comments
MisterMean
MisterMean

Perhaps these tax breaks (and abatements) should be considered as income to the recipient as far as their federal taxes are concerned.   After all it is a form of income.

DOCensors
DOCensors

"the state has the third-highest proportion of hourly jobs paying at or below minimum wage. And despite its low level of unemployment, Texas has the 11th-highest poverty rate among states."

The policies of liberal activists like the DO advocating for unmitigated immigration of peasants from Mexico and South America surely have nothing to do with that... 

You say: Let them all in and pay them $15 an hour then everyone will be fat, happy and have health insurance too. 

Adam Silva
Adam Silva

"The takeaway: Whether incentive deals are a net positive for the people of Texas is a fun debate, but there's no debating that it's huge corporations and their lobbyists who benefit the most."

erichenao
erichenao

@jscro Not surprised, and won’t be surprised when nothing changes about it either. #sometimesIwannagiveup

Myrna.Minkoff-Katz
Myrna.Minkoff-Katz topcommenter

Texas gets a 7.9% unemployment rate in return for $19 billion in corporate welfare payouts.  Meanwhile idiot Perry refuses to cover millions of uninsured Texans, the education system is a mess, and republican politicians get big donations from the fat cats.

cowboymiketex
cowboymiketex

@TAPTP @Dallas_Observer Republicans always give priority to Corporations over american citizens.

albert.finney000
albert.finney000

If XYX Co. Relocates to Texas due to tax breaks, it doesn't cost me or my neighbor $759, the figure is closer to $0.00, more or less. Potential revenue and cost are a bit different.

Montemalone
Montemalone topcommenter

So, the government is picking winners and losers. Existing business is forced to compete on an unlevel playing field. Individuals suffer from decreased funding for infrastructure and other quality of life issues.

But it's not socialism. It's republicanism.

manu
manu

Amazon's penalty if they don't create the number of jobs Ryan said they would? $1 million, or 0.03% the amount of the incentive. One minute Perry and Ryan are doing this, the next minute they say 'govt doesn't create jobs', and the next minute they cry crocodile tears over the deficit. The cynicism is breathtaking.

albert.finney000
albert.finney000

So if company X has never paid tax in Texas because it's located in NJ, and it relocates to Texas and doesn't pay taxes for a period of time, that's a cost? By that measure, the company will cost Texas money even if it relocates to Florida. If the Observer doesn't buy my product, can I count that as a cost?

DOCensors
DOCensors

@Chuck_Schick Are they giving these corporations money?

Because people who receive welfare not only don't pay any taxes but cost real money. They also do not contribute anything to society or the economy and only take take take take take. 

So yes "corporate welfare" > actual welfare. 

albert.finney000
albert.finney000

@cowboymiketex - government costs me, corporations pay me. Priority to job givers is also prioritizing people, at least those who don't mind working.

DOCensors
DOCensors

@albert.finney000 Fictional loss vs actual losses they don't mention like the overly bloated local, state and federal government spending that actually DOES cost taxpayers. 

clifford.carpenter
clifford.carpenter

@albert.finney000 If XYX Co. doesn't relocate to Texas because of a Property tax break then the owner of the property that XYX Co. is no longer going to buy will continue to owe property taxes every year.  That is where the $759 comes from.

albert.finney000
albert.finney000

@Montemalone @Montemalone - now that's a reasonable argument, except for the fact that blue states do this as well.

Chuck_Schick
Chuck_Schick

They're getting money in the form of tax breaks and other incentives. And you forget about the working poor, who may benefit from government money but also contribute payroll taxes, sales taxes and property taxes in the form of rent. Just looking for a happy  medium between the two. Texas seems slanted too far to the corporate side.

mavdog
mavdog topcommenter

that chart is pure bs.

the costs of operating schools are subject to inflation, as the value of the currency changes the salaries and other costs move in tandem.

student acheivement scores on the other hand shouldn't be inflated, they might show marginal improvement and (hopefully no) decline over the same time period.

to graph the two indices and expect they should move in like manner is absurd.

this much is true, to expect that less money for education correlates to improved educational achievement is a falacy. but wait, isn't that what the Texas Republican leadership has hoisted on the texas public school students?

albert.finney000
albert.finney000

@clifford - now lets factor in jobs and the economic activity that brings, not to mention sales and income taxes.

Montemalone
Montemalone topcommenter

@albert.finney000 Democrats don't campaign on the evil government intruding into everyone's life, that's a repub argument; another in the long line of hypocrisies that spew forth from the party of selfishness, hatefulness, and greed.

mavdog
mavdog topcommenter

@DOCensors @Chuck_Schick 

many incentive packages do involve the payment of cash to the business.

when an existing building has its property taxes abated as a part of the incentive package, the building's taxes that were paid to the taxing authority in prior years are no longer received by the taxing authority. that money did exist. the taxing authority loses the revenue, and it must find other sources (increase the mill rate for instance) or cut their expenses (lay off employees for instance) to compensate.

yes, tax breaks and other incentives involve real money, and a tax break is the same as receiving money.

DOCensors
DOCensors

@Chuck_Schick A tax break is not the same as receiving money. 

When someone takes the EIC and receives a check not only did they not pay taxes they got paid in tax dollars, in addition to all the other services like food stamps and WIC and whatever else they collect. They are taking and not giving anything. 

Not the same as ATT not being charged a fictional million for moving to Dallas. That million never existed. 

mavdog
mavdog topcommenter

@albert

you seriously argue that inflation has not impacted education costs?

Wow.

would love to see how you argue that inflation doesn't affect the salaries of teachers and other school workers, or how inflation doesn't affect the costs of textbooks and the construction of new facilities. you know, the expenses schools incur when they operate.

really, try to argue that, would ya?

too funny.

albert.finney000
albert.finney000

@mavdog - You seriously believe this is due to inflation? Wow.

DISD84
DISD84

@DOCensors @clifford.carpenter @albert.finney000 When I attended a DISD high school in 1984, we had a 65% dropout rate. That same high school - with 89% of kids from working poor neighborhoods - has cut it down to less than 30%.  That's still too high, but you have to look at it in context of real community history, outside political sound bites and crap about immigrants.  It's real progress.  And of the 157,000 kids in DISD  - the overwhelming majority of them CAN read.  Don't believe it?  Really care?  March your happy butt down to your local school and volunteer.

DOCensors
DOCensors

@clifford.carpenter @albert.finney000 DISD has a billion dollar plus budget and can't teach a kid to read. For decades we have thrown more money at the problem while the problem only gets worse because no one will face the truth.

clifford.carpenter
clifford.carpenter

@albert.finney000 All of those should be factored in except income taxes as Texas does not have a state income tax.  

Unfortunately none of the items you list help the school districts that just had their tax base drastically reduced and are forced to either cut costs (many times necessarily so but often times to the wrong line item in my opinion) or push for tax increases on the rest of us property owners.

albert.finney000
albert.finney000

@Montemalone @albert.finney000 -Conservative Democrats used to. They're all dead tho. The founders kinda felt government might become too intrusive, and I'm told that they were liberals.

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