Thursday, April 20, 2006
Trolling for Votes
In a continuation of the “Largesse Tour”, the Governor was in western Pennsylvania handing out checks written on the taxpayers’ account. What a great election year campaign tool. As companies accept checks to move within the state or across the street, the management and employees cheer the arrival of the money and are no doubt very grateful to the Governor.
For example, on Wednesday, April 19, the Governor handed a check for $487,000 to a call center company that is moving 50 employees from the Union Trust Building to Three Mellon Center—literally just across the street. The company is expected to add 20 jobs through a relocation from out of state and hopes to add 88 more over the next five years. In other words, the confirmed new jobs are costing taxpayers $24,000 each. Assuming these jobs pay $35,000 per year, the state will collect about a thousand dollars in additional revenue from each new worker. The interest on $24,000 at 5 percent is $1,200. In all likelihood, the state would have been far better off investing the money in bonds and it would still have the $24,000 in assets. The 20 jobs will never repay the taxpayers’ subsidy.
According to the Pittsburgh manager of the company, one of the reasons they elected to stay in the City is Pennsylvania’s strong public sector investments in business development. What a sad thing for a businessman to say. But it is becoming more and more the modus operandi in the business community. The state assistance will undoubtedly help pay the City’s payroll preparation tax.
The only question is, “how long will it be before every company in the state lines up for a handout?” After all, why should companies pay taxes and never get anything back when so many others are sidling up for the dole?
Despite years of this kind of hefty taxpayer subsidy for companies who move within the state while promising to add workers, Pennsylvania remains among the slowest job growth states in the country. The reason? The added cost these programs generate must be covered by dollars that should have been left in private hands to begin with.
For example, on Wednesday, April 19, the Governor handed a check for $487,000 to a call center company that is moving 50 employees from the Union Trust Building to Three Mellon Center—literally just across the street. The company is expected to add 20 jobs through a relocation from out of state and hopes to add 88 more over the next five years. In other words, the confirmed new jobs are costing taxpayers $24,000 each. Assuming these jobs pay $35,000 per year, the state will collect about a thousand dollars in additional revenue from each new worker. The interest on $24,000 at 5 percent is $1,200. In all likelihood, the state would have been far better off investing the money in bonds and it would still have the $24,000 in assets. The 20 jobs will never repay the taxpayers’ subsidy.
According to the Pittsburgh manager of the company, one of the reasons they elected to stay in the City is Pennsylvania’s strong public sector investments in business development. What a sad thing for a businessman to say. But it is becoming more and more the modus operandi in the business community. The state assistance will undoubtedly help pay the City’s payroll preparation tax.
The only question is, “how long will it be before every company in the state lines up for a handout?” After all, why should companies pay taxes and never get anything back when so many others are sidling up for the dole?
Despite years of this kind of hefty taxpayer subsidy for companies who move within the state while promising to add workers, Pennsylvania remains among the slowest job growth states in the country. The reason? The added cost these programs generate must be covered by dollars that should have been left in private hands to begin with.
