Tax Increment Financing

Free Lunch: How the Wealthiest Americans Enrich Themselves
at Government Expense (and Stick You With the Bill)
I didn't know.

[In] many of the big new box stores, when you walk to the cash register to pay for your purchase, you’re required to pay sales tax. But the government never gets that money. Instead, those sales taxes are used to pay for the cost of the store. […This] means that your community’s police department, fire department and schools and libraries aren’t getting those sales taxes.

[...]

The argument is called “tax increment financing.” From the point of view of the people who get it, here’s the pitch they make. They say, “Dear City Councilmen: We want to make this big investment in your town. We’re going to build this store. If we don’t build the store in your town, why, we’ll just go down the highway to the next little town and they’ll get all the benefits of having our store in your town! And the price for this is, you’re going to let us keep the taxes from sales and you’re going to not charge us property taxes in return for our investing in your community.”

[...]

In very select circumstances, it may be true temporarily. WalMart does this. For about a third of WalMart stores, it says, it seeks these kinds of deals. When WalMart opens a store, it’s selling the same diapers and lightbulbs that every other merchant in town is selling. All they’re doing is bringing business to a concentrated location. That’s what these subsidies do. They provide the big retailers who get them with the opportunity to lower the cost of building their store and, therefore, to run out of business the local competition. They’re not adding to the economy.

[...]

I show that in the first three years that [Cabela’s was] a publicly traded company they reported profits of about $220 million. But they made deals for $294 million of subsidies. They’re really not in the business of selling goods. They’re in the business of soaking the public. And this is going on at an enormous rate all around the country.

[...]

I think most people walking into a WalMart, Cabela’s, … a lot of other stores have absolutely no idea that the sales tax money is going to the owners of the store.

[...]

This will stop when taxpayers say to themselves, “Wait a minute! I’m paying taxes so that the Walton family, the richest family in America, can be richer? I’m paying taxes so the Cabelas out in Nebraska or Johnny Morris who owns Bass Pro can get richer? That’s what my taxes are going for? That I am forced to pay?” People don’t know about it. That’s the only reason this goes on everywhere.

   transcript via Prairie Weather

Fom an interview on NPR with author David Cay Johnston, where he also talks about how Bush funneled taxpayer money into his own pocket on his Texas Rangers deal. [audio]

The political and commercial morals of the United States are not merely food for laughter, they are an entire banquet. --Mark Twain