Democrats: Taxes don’t hurt growth, except when I say they do

New York governor Andrew Cuomo is giving $26 million in tax breaks to PepsiCo and a German dairy company in reward for their promise to open a joint yogurt factory in the western part of New York. 

The utter injustice of such tax concessions to companies large enough to extort them is of course patent.  While the big guys get the breaks—and for not that much in return: it is estimated that the new yogurt plant will bring in a mere 186 jobs—small businesses, who can least afford it, have to continue to pay exorbitant tax rates.  Pepsi probably shells out several million a year on diversity training and diversity PR alone. 

But what is equally galling about corporate welfare is that the Democratic politicians who dole it out (no less enthusiastically than Republicans) never recognize the obvious principle behind their actions: that high taxes hurt growth.  If lowered taxes are a boon to PepsiCo and its German yogurt partner Theo Müller (or to “green” energy companies in the Obama-Jerry Brown portfolio of uncompetitive energy enterprises), why wouldn’t they be a boon to every other company in New York state?  Yet flush after signing a deal to exempt a favored company or industry from punishing taxes, these same politicians almost invariably turn around and keep taxes high or raise them on everyone else, on the ground that tax rates don’t matter.

Republicans have their own variety of hypocrisy.  While rightly objecting to tax breaks for green energy, they fight strenuously to preserve them for conventional energy companies (or even for the ethanol boondoggle), on the specious ground that getting rid of a selective tax exemption constitutes a “tax increase” in violation of the Grover Norquist no new taxes pledge.  The Republicans’ opposition to get rid of existing corporate welfare simply plays into the Democratic playbook that Republicans are shills for the rich and powerful. 

 

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