Legislator says new state law is corporate welfare and should be abolished

Eliminate Corporate Subsidies - Intelligence Squared US


Rep. Tom Gann, R-Inola, has filed House Bill 1381 to Repeal the Large-Scale Economic Activity and Development (LEAD) Act of 2022, a new law he says is nothing but corporate welfare.

Last year, the Legislature passed House Bill 4455, the LEAD Act, which promised investment rebates for the cost of qualified capital expenditures for certain establishments based on creation of new direct jobs. HB 1381 will repeal the law to keep it from activating in the future.

Gann called this “a failed attempt to entice business to Oklahoma using corporate welfare.”

“Fallacy is defined as a statement or an argument based upon a false or invalid inference, a false notion, or an incorrectness of reasoning or belief,” Gann said. “There is a fallacy of thought in Oklahoma politics that somehow the state must compete with other states to attract business for economic development. This has been proved false by reliable research and experience. The recent unsuccessful proposal to land an EV battery plant in Oklahoma is the latest example that money is not the motivator in this race to the bottom with other competing states.”

Gann pointed to an analysis in 2018 by The Mercatus Center of George Mason University, written by Michael Farren and Anne Philpot, entitled “With Amazon HQ2, the Losers are the Winners: Why Economic Development Subsidies Hurt more than They Help.”

The report says, “Despite arguments from economic development officials justifying such subsidies, both economic theory and experience suggest that cities and states are throwing their money away when they court Amazon’s favor through subsidies. Even subsidies worth billions of dollars are unlikely to sway Amazon’s decision.  Worse, these kinds of targeted economic development incentives fail to produce economic growth.”

The study also points to a kind of extortion that takes place for cities and states: “Furthermore, after subsidies are initially given, there is a tendency for the corporation to demand additional subsidies to underwrite future expansion or to remain local.”

The Mercatus Center analysis also cited research by University of Texas professor Nathan Jensen, who found that fewer than 15% of companies receiving subsidies from the Texas Chapter 313 Economic Development Program had their location decision swayed by handouts.

Jensen concluded, “many of the companies involved were coming to Texas even before being authorized to receive the incentives.”

Gann said the majority of taxes come from ordinary Oklahomans who want to provide for their families and have some left over at the end of the month. The biggest hinderance to tax relief for these citizens, he said, is the mistaken belief that government creates wealth by giving our money away to corporations with billion-dollar revenues.

“Oklahomans need tax relief and by repealing HB1381, the largest corporate welfare in state history, they will secure it,” Gann said. “We need to stop the giveaway of tax dollars to those who don’t need it and instead give back to the Oklahoma taxpayer.”

Gann quoted Davy Crockett, Tennessee member of the U. S. House of Representatives in 1822,  on the giving away of taxpayer dollars, “…not yours to give.”

Source: House press release