Three prominent organizations in Tennessee want state legislators to open the books and let the public know details about incentives the state gives away for economic development purposes, according to The Daily Memphian.
Those three organizations are the Beacon Center of Tennessee, Americans for Prosperity – Tennessee, and the Tennessee Coalition for Open Government, according to the paper.
“A state document released in December 2017 shows Tennessee has $987.6 million in carry-over tax credits from previous incentive packages. Those include $790.5 million for investments in industrial machinery and $197.1 million for standard job tax credits. A new report is to come out before Jan. 1, 2019,” The Daily Memphian reported.
The report, according to the paper, doesn’t show which companies received the tax credits. State officials hid five items on the document “to avoid violating taxpayer confidentiality.” “Those involve credits for job creation in high-poverty areas, an environmental project, a headquarters dealing with a net operating loss, for green energy investment and for the purchase of brownfield property,” according to The Daily Memphian.
The paper quoted AFP state director Tori Venable as saying “a million-dollar money bomb” will detonate when the economy tanks.
“AFP-Tennessee is worried those types of liabilities could impact the state budget, at $37.5 billion this fiscal year, as most of those tax credits come due,” The Daily Memphian reported.
AFP-Tennessee, Beacon, and TCOG want to help change state law so the public knows who gets what for tax credits, the paper said.
The Department of Finance & Administration, The Daily Memphian said, “doesn’t have any concerns about the carry-over tax credits, though, saying it is not unusual to have a balance.”
“Companies can carry over those tax credits for 15 years, and they are allowed to reduce their taxes by only half during a year,” the paper reported.
As The Tennessee Star reported earlier this year, Beacon officials said Tennessee’s economy would thrive even without local and state governments dishing out tax incentives to already wealthy corporations.
What’s more, these tax incentives penalize Tennessee’s small business owners, Beacon said.
“Simply put, corporate handouts benefit rich millionaires at the expense of small business owners and taxpayers,” said Beacon spokesman Mark Cunningham in August.
Cunningham cited an original documentary Beacon released last year. That documentary, titled “Rigged,” was about what the think tank described as the malignant effects of crony capitalism in Tennessee.
Under crony capitalism, there are mutually advantageous relationships between government officials and certain people in business. This happens often at the expense of other business owners. This also often gives certain business owners an upper hand over his or her competitors.
The “Rigged” documentary featured two Memphis furniture store owners who had to compete against the city’s new IKEA store, which got tens of millions of dollars from the city government.
“What ended up happening was that one of those business owners has since gone out of business,” Cunningham said.
“Everyone can look at this practice and say ‘This is not fair. This is not what capitalism is. This is not the free market at work.’ Instead, it’s the opposite, where the government is picking winners and losers. We don’t think that’s fair.”
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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected]
Photo “Tori Venable” by Tori Venable.
Background Photo “1040 Form” by Ken Teegardin. CC BY-SA 2.0.