At least until GE pays taxes, no more arts funding cuts

When we talk about government funding for the arts, it’s easy to feel that cuts to arts funding are only fair when our Great Recession is already forcing governments to cut spending on necessities like police and firefighters and schools. So we at The New England Journal of Aesthetic Research might even support the 26 percent cuts–reduced from $167.5 million to $124.5 million–that the U.S. House approved a month ago for the National Endowment for the Arts (NEA) budget for the current fiscal year if we were guaranteed that that money was instead being spent on, say, police, firefighters and schools.

But it’s just as reasonable—perhaps even more reasonable—to assume that plans floated by President Barack Obama and Congress to shrink or eliminate the NEA, National Endowment for the Humanities, Community Development Block Grants, Pell Grants, and the Corporation for Public Broadcasting, which subsidizes public radio and television, not to mention cuts to fire, police and schools, are actually all subsidizing the richest industries in America.

There’s an idea in America that we’re a straight capitalist society, you know, economic survival of the fittest and all that. But in fact our government subsidizes pretty much everything—from farming to oil, from finance to autos to GE.

General Electric, The New York Times reported last week, reported $5.1 billion profits in the U.S. and $14.2 billion worldwide for 2010, but through, ahem, innovative accounting and by keeping certain things overseas its tax filings profess that the company owes zero federal taxes—and actually the feds owe the company $3.2 billion in tax credits. Remember that the total federal NEA budget was $167.5 million, or just 5 percent of the tax break GE says it’s owed. That’s just one corporation.

Over the past decade, GE has cut 20 percent of its American work force. Last fall, GE pressed the commonwealth of Massachusetts for $25 million in tax breaks in exchange for promising not to cut more than 150 jobs at its aircraft engine plant in Lynn for the next six years. The state eventually declined GE’s blackmail offer.

With this background, is it a surprise that President Obama named GE CEO Jeffrey Immelt chairman of his new Council on Jobs and Competitiveness in January? Sigh. In fact the word for this sort of company—a wildly wealthy company that does all it can to avoid paying it’s fair share in taxes, while simultaneously claiming government welfare checks—is anti-American.

GE is just one of our great corporate welfare recipients. In Boston, the financial firm Fidelity announced in March that it plans to move nearly 1,100 jobs out of Massachusetts. This is the same firm that has been receiving significant annual tax breaks since the state created a special tax cut for mutual fund companies in 1996. The goal then was to make the state competitive with other states that had already given the financial industry similar tax breaks.

The Boston Globe reports: “The state provided a tax break to Fidelity and other mutual fund companies that significantly increased their workforce over the next five years. One of the changes allowed firms to calculate their state income tax solely based on the amount of sales in Massachusetts, instead of having to use a combination of sales, property, and payroll. But after five years, all the job requirements attached to the tax incentive disappeared — allowing any mutual fund company to qualify for the more favorable tax treatment, regardless of whether it added or eliminated jobs. The Department of Revenue estimates the tax change has allowed the industry to save roughly $1.7 billion over the past 15 years, including $142 million this year.”

Another example: A year ago, the Massachusetts Economic Assistance Coordinating Council approved a multi-year $22.5 million tax break for insurance giant Liberty Mutual to help it build a $300 million office tower at the corner of Berkeley Street and Columbus Avenue in Boston. That’s on top of a $16 million tax break from the city of Boston over the next 20 years. So $38.5 million in city and state tax breaks spread over two decades, or corporate welfare of $1.925 million a year.

New York Magazine reports: “Corporate share of the country’s revenue from taxes fell from 30 percent in the mid-‘50s to 6.6 percent in 2009.”

If state and federal governments can continue to afford to subsidize our most successful and most capitalist enterprises, there’s no reason they can’t continue to maintain funding levels for the arts—and even increase them. Why should socialism just be for American corporations?

Previously:
April 1, 2010: MA, RI subsidize millionaires, cut the arts.
Nov. 2, 2009: Fine arts not in Patrick’s Creative Economy?
June 29, 2009: 23 percent cut for MA cultural council.
June 14, 2006: Your tax dollars at work: “A decade ago, the state changed the way Massachusetts’s mutual-fund industry is taxed in a way that, according to our Department of Revenue, will save the industry roughly $132.4 million this fiscal year and some $141 million the next.”

One Response to “At least until GE pays taxes, no more arts funding cuts”

  1. Natasha says:

    best summary of tax breaks I’ve read. & most depressing. How do you have time to write these things??