Welfare Checks for Millionaires

This year, I’ll turn 70—a born and raised Pennsylvanian from the Norristown area, I’ve lived in the state most of my life. I’ve been a small business owner in Lancaster for decades, and after all these years of paying taxes I like to stay engaged with how our state spends its money.

Despite what it says in the title, I’m not writing about Pennsylvania’s welfare system. That’s a debate for another day.

I’m writing about the handouts we give to Pennsylvania’s “one-percenters”—the corporate executives who benefit from our state’s economic development incentives. The commonwealth’s approach to job creation is completely backward, and ripe for corruption and favoritism.

I remember the excitement surrounding the big expansion at the Lancaster Duracell plant in 2014. The battery giant received nearly $12 million in tax credits to create a mere 25 jobs—a blip on our town’s employment statistics.

When this announcement hit the news, business leaders celebrated. I felt like the only one who raised questions. Is this really worth $12 million? What happens if the expansion fails? If they pocket the extra money and move on?

Just two years later, my suspicions were confirmed. In 2016, Duracell announced they were closing the Lancaster plant. John Howard (God rest his soul), who was Mayor of Lancaster at the time, did all he could to prevent the closing—practically begging Duracell to stay—but Duracell’s parent corporation, Procter & Gamble, went with their bottom line. Lancaster didn’t lose 25 jobs, it lost all 430.

I didn’t even have the heart for an “I told you so.”

Now, every time I come across another business news story touting development based on “grants” or “subsidies,” it’s all I can do not to lose my cool. That’s especially true when they use euphemisms like “opportunity zone” or “economic revitalization.”

This year, state government will spend nearly $850 million on loans, subsidies, and grants to private businesses. The horse racing industry alone will get a cool $230 million.

Can we call a spade a spade? Harrisburg politicians are cutting checks for their districts or for well-connected businesses.

Sometimes the excuse is that a declining town or run-down city block needs some extra juice—so businesses who operate there get a nice pile of unaccountable money. Other times there is no excuse, just a (failed) $6 billion backroom deal for Amazon’s HQ2 between Governor Wolf and Jeff Bezos, the richest man in the world.

I ran a construction company in the early 2000s. I was a job creator. Small businesses like mine—family-owned, serving a local community—are the secret ingredient to lasting economic development. We were thrifty and competitive, and we didn’t ask taxpayers for a handout or to shoulder our risk.

That’s why my position on this issue hasn’t changed. If you asked my opinion 20 years ago on handouts for businesses—”corporate welfare,” as I call it—I would have given the same answer: let there be a level playing field, instead of politicians picking winners and losers. Small businesses shouldn’t foot the bill for taxes that subsidize their biggest competitors.

Maybe that’s why job creators, and the educated workforce they need, have been fleeing the state for decades. But we can reverse this trend: Lower the sky-high corporate tax rate for all rather than bribing certain businesses. Cut back on burdensome regulations and licensing that represent barriers to job creators and job seekers alike. Limit state spending growth to avoid deficits and tax increases.

We can keep spending money on corporate welfare—handouts for Pennsylvania’s richest—or we can put it back in taxpayers’ pockets, so they can invest it in their own communities and strengthen small businesses.

Which will provide a better return on investment?

Jeffery Williams is a small business owner and advocate for free-market reform from Lancaster, Pennsylvania.