Corporate Welfare: A Bad Deal for Pennsylvanians

Hanover company WNS closed its doors for good at the end of September, putting 107 men and women out of work. This news comes just two years after Governor Wolf announced the addition of 300 jobs and over $700,000 in government grants for the company—exemplifying how corporate welfare is a misuse of public money.

Corporate welfare—an issue which CF analzyes in our newest policy points—awards subsidies to businesses, essentially picking winners (often well-connected corporations) and losers in the marketplace. This is unfair to taxpayers, workers, and entrepreneurs. Political elites playing favorites and dishing out favors should not determine the success or failure of companies.

This is not the only issue with corporate welfare.

As WNS demonstrates, corporate welfare creates instability for workers, and fails to protect jobs and boost the local economy as intended. This is hardly an unexpected outcome. Just look to Aker shipyard in Philadelphia, where, since the 1990’s, politicians have been pumping millions in taxpayer dollars, despite the company never creating the number of jobs they promised.

Rather than bribe companies to stay in the state, or spend millions of taxpayers’ dollars on companies that ultimately fail, lawmakers should create conditions for businesses to flourish in Pennsylvania. For instance, cutting corporate welfare and using the savings to reduce the corporate net income tax will facilitate the creation of small businesses and make Pennsylvania more competitive.

This solution would impact all businesses, not just the ones Harrisburg politicians choose. Embracing pro-market reforms would reduce the ability of special interests to waste taxpayer resources while encouraging businesses of all sizes to grow in Pennsylvania—benefitting workers across the state.