New Markets Tax Credits: Billions for Big Buildings and Bigger Corporations
In 2000, Congress approved a program called the New Market Tax Credits with the intent to provide subsidies for development in low income areas–but by gaming the system and using very out-of-date demographic data, huge corporations are getting millions in government money to build high-end hotels and condos. Bloomberg has the story, and I strongly recommend reading article:
Since 2003, some of the world’s biggest financial companies, including Goldman Sachs Group Inc., U.S. Bancorp, JPMorgan Chase and Prudential, have taken advantage of a federal subsidy that will cost taxpayers $10.1 billion — and most of the public has never heard of it.
Investors have used the program, called New Markets Tax Credits, to help build more than 300 upscale projects, including hotels, condominiums, office buildings and a car museum, on streets far from poverty, according to Treasury Department records released through a federal Freedom of Information Act request.
A total of $7.4 billion of the $16 billion already spent under New Markets, or 46 percent, has gone to tracts with family poverty levels ranging from zero to 19 percent, Treasury and census data show. Those communities include areas of California’s technology-rich Silicon Valley.
The abuse of the program is a classic example of corporate welfare at its worst–and a prime candidate for a Grafty.
It sadly follows the pattern exploiting the real issue of needing to help poor communities to justify spending billions on a bizarre “public/private partnership” program, while in the end most of the money intended to help regular people ends up in the pockets a few extremely wealthy and politically connected private companies.
It would be nice before Congress even started thinking about trying to cut the programs that actually provide efficient, direct help to people–like Social Security–they first deal with the billions spent on wasteful, unnecessary corporate welfare.
[ed. note: This is another post in Firedoglake’s semi-regular series exposing and exploring ways in which the federal government spends vast sums or forsakes vital revenue in a perpetual, profligate and pathetic quest to assure corporate America that the elected representatives of we the people are really, truly, madly, deeply “business friendly.” With each story, we hope to highlight another government giveaway, tax break, or loophole handcrafted by lawmakers and lobbyists to keep the powerful powerful and make the rich richer. If the reverse Robin Hoodism rises to special heights, we will present it with the FDL Wealthy Welfare Award—or, as we have taken to calling it back here, The Grafty.
As the government works its way up to what will almost certainly be an unprecedented season of deficit peacockery–no doubt resulting in a calls for cuts to Social Security, Medicare, and the other guylines of our social safety net–remember the Grafties, where real money is available to meet our obligations without taking even more away from those who can least afford to lose.]