10 August 2020

 
“No taxation without representation” is the lionized American principle that no government shall impose taxes on any population that lacks a voice in that government. Steadfast commitment to this principle among American settlers proved Revolutionary in 1765, contributing to the campaign for American independence. It’s a democratic ideal that imbues and transcends political thought in this country.

It’s surprising, then, that more than 250 years hence, American society has not collectively embraced the equivalent principle, “No subsidization without representation.” After all, subsidies are just negative taxes that transfer public wealth to recipients designated by the government.

Subsidies are hallmarks of economic development in the US. Altogether, local and state governments spend around $70 billion annually to lure employers to their jurisdictions or to underwrite firm expansions. To support their decisions to turn over public resources to private corporations, government officials tout metrics like the anticipated number of jobs from a project, the total dollar amount to be invested in a venture, or the physical size of a proposed facility.

For instance, Western New Yorkers recently learned that the Amazon warehouse proposed for Grand Island stands to be a $300 million, four-million-square-foot structure that will house at least 1,000 jobs. These big, impressive-sounding numbers tend to convince us that some projects are so large in scale that we can’t live without them – that we should accept the public costs, including any subsidies, needed to make them happen.

But size and scale are not reliable predictors of a project’s ability to generate shared wealth for an affected community. While some development projects might be able to produce so much community wealth that they warrant subsidies, such a decision must be made by the community. Put another way, subsidization cannot occur without representation. Communities must have a voice in their government’s use of negative taxation.

Toward that end, this post concludes with a non-exhaustive list of questions that belong in any negotiation over public subsidies for private development. Answers to these questions should flow from inclusive, democratic, participatory processes.

• Does the community have a comprehensive and/or land use plan that resulted from a community-engaged planning process? Is the project consistent with these plans?
• What combination of wages, working conditions, and benefits make a job a “good job” in this community?
• How many “good jobs” will this project create?
• Will the project lead to a net increase in “good jobs”? Will it displace “good jobs” from elsewhere in the economy?
• What is a reasonable maximum subsidy for each “good job” the project commits to creating?
• How often will public costs and benefits be disclosed? Where will disclosures be published? Does a mechanism exist to recapture funds if reported benefits do not meet agreed-upon expectations?
• Who will fill “good jobs”? Where will they live? Will anticipated employment patterns mitigate existing conditions of racial, social, and economic inequality?
• What environmental impacts will the project have? Will they be irreversible? Equitably distributed?
• How might future community residents describe this project?