Cronyism: A Tennessee Love Story

The Beacon Center’s new infographic shows how corporate welfare runs amuck in the Volunteer State.

When you hear the word “welfare,” you usually think of all the government programs that provide a safety net for the poorest among us. But there’s a whole slew of welfare going to the most well-to-do, often massive and politically savvy corporations. When the Beacon Center sought to uncover how much money our state and local governments doled out in this form of welfare, what we call corporate welfare, we were astonished. And we created a cool infographic to spread the word.

Since 2005, Tennessee governments have handed over $1.75 billion in the form of tax credits and cash grants to large companies. And the vast majority of it has gone to just seven large corporations. Talk about a lopsided playing field.

The worst part of this corporate welfare scheme—taking from some and giving to others—is what could be done instead. Take for example the case of Hemlock Semiconductor, which received massive subsidies to locate a plant in Clarksville as part of the solar panel supply chain. Just a few months ago, the company announced that it was laying off its Tennessee workforce and ending construction on the unopened plant. Despite the company’s utter failure to live up to its promises, taxpayers will lose $90 million on the deal.

The $90 million lost on Hemlock could have gone to cut the business tax for all Tennessee businesses by almost one-half percent. That’s a tax cut for 170,000 different businesses, from the largest corporation to the mom and pop shop down the road.

Even more importantly, each of those 170,000 businesses would have benefitted from the same percentage tax cut, with none receiving special treatment. Yet, we took all that money from those companies and dished it out to one company. One company that took the money and ran.

Those thousands of other existing Tennessee businesses: they create 98 percent of the jobs in our state. What a way to treat the real backbone of our state’s economy. Rather than reward them with an equal tax cut, we continue to force them to pay the 12th highest business tax in the nation and the highest per capita business tax of any surrounding state. Tennessee has always been thought of as a low-tax state, but when it comes to our business tax, it really is an island in a sea of tax havens.

It’s not just massive corporations lining their pockets. Hollywood elites get in on the action, too. Movies such as “Hannah Montana” and shows like “Nashville” have raked in millions of taxpayer money. In all, taxpayers will fork over $13.4 million this year on film incentives. What will that money buy you? A mere 164 temporary jobs, many of which will be filled with non-Tennesseans. That amounts to $82,000 per job, much of it leaving taxpayers’ pockets and heading for the Hollywood hills.

As our new infographic shows, government really is picking winners and losers in business. And the losers are losing a ton. Check out the new infographic and share it with your family and friends. Until Tennesseans realize how bad the corporate welfare problem really is, corporate cronies and Hollywood fat cats will continue to get their hands on your hard-earned money.

Justin Owen is president & CEO of the Beacon Center of Tennessee, the state’s premier free market policy organization. Visit Beacon online at www.BeaconTN.org.