The details are as shocking as they are disgusting. As the Associated Press reports in the attached story, "Two years ago, the 6th U.S. Circuit Court of Appeals struck down Ohio's tax credit on new equipment, saying the practice hinders interstate commerce because the incentives are available only to businesses that invest in Ohio." In other words, plaintiffs correctly noted the credits are creating a race to the bottom that violate interstate commerce laws by forcing states and cities to compete with each other to give away more and more taxpayer cash to Big Business. In the Ohio case, the tax credit was used to give DaimlerChrysler roughly $300 million in taxpayer cash - cash that Toledo's county auditor says was siphoned away from local schools, forcing the city to close up to nine schools or fire 380 school workers.
In striking down the lower court ruling, the U.S. Supreme Court not only ruled against Ohio taxpayers, but against all taxpayers. Chief Justice John Roberts, formerly a corporate lawyer, said in the official opinion that "State taxpayers have no standing ... to challenge state tax or spending decisions simply by virtue of their status as taxpayers." In other words, not only will the Ohio law remain, but state taxpayers throughout the country now have no legal right to challenge the decisions of their bought-and-paid-for elected officials who are selling off our government to the highest bidder.
To get a sense of just how far reaching an affront to taxpayers' rights this ruling is, consider that USA Today earlier reported that taxpayers in other states were moving forward with similar cases. As just one example, in North Carolina, taxpayers have challenged the state's $242 million giveaway to Dell Computer. Now, the Supreme Court has essentially said they aren't even allowed to bring such a case. Want to try to stop Wal-Mart from abusing interstate commerce laws by extorting a billion dollars in taxpayer subsidies? Forget even having your case heard in court - your Supreme Court says you have to simply sit back and accept higher taxes to fund this kind of largesse.
Remember - these taxpayer giveaways are accelerating and come at a huge cost in terms of higher taxes for individuals. As USA Today noted, "In 1977, nine states gave tax credits to corporations [but] by 1998, that number had grown to 36." At the same time, "individual income taxes are growing at a faster rate than corporate income taxes" because state/local governments are recovering the tax giveaways from ordinary citizens. According to the Census Bureau, "corporate income taxes collected rose 6.5% from 1994 to 2004, while individual income taxes collected went up 49.7%."
Also remember that, as Greg LeRoy notes in his book The Great American Jobs Scam, these taxpayer giveaways often do not result in the benefits Big Business promises. In fact, many of the corporations that receive these taxpayer giveaways never even follow through on the economic development or job creation they promise.
But then, that's what this is really all about: bought-off politicians giving away our hard-earned taxpayer dollars to already wealthy corporations without demanding anything in return. We see this with the Medicare bill and how it gives away more than $1 trillion to the health care/pharmaceutical industries without demanding these industries lower their prices (in fact, the bill prohibits the government from negotiating lower prices for medicines). We see it with the energy bill and how it gives away billions in new tax breaks to oil companies without asking them to lower their prices. And we see it with corporate welfare.
As I note in my new book Hostile Takeover, this is the best we can hope for from a government: policies that shower Big Business with taxpayer cash in order to bribe companies to do things. This throw-money-at-the-problem corruption substitutes for a government that should be asserting itself as a protector of ordinary citizens by forcing powerful economic institutions to play by a set of rules. Now, thanks to the Supreme Court, taxpayers have even less of a right to fight back against this hostile takeover in our own legal system.
Justices block Ohio taxpayers' lawsuit
By PETE YOST
Associated Press Writer
Taxpayers have no right to challenge nearly $300 million in tax breaks that Ohio's elected officials used to entice DaimlerChrysler AG to build a new plant in Toledo, the Supreme Court ruled unanimously Monday.
By ruling that the taxpayers had no right to sue, the justices avoided deciding whether tax incentive programs are constitutional.
David Sirota is the author of the book Hostile Takeover, released in May of 2006. To order the book, go to Amazon, Barnes & Noble or Powell's Bookstore.