This year, I’ll turn 70. Born and raised in the Norristown area, I’ve spent the last 31 years in Lancaster County. I’m a business guy — I ran a construction company here in Lancaster for several years and currently run a consulting firm that helps small businesses thrive. After all these years of paying taxes, I like to stay engaged with how our state spends its money.
That’s why I’m concerned about welfare spending — but not the kind that probably comes to mind.
I’m talking about the handouts we give to Pennsylvania’s “one-percenters,” big businesses that benefit from our state’s corporate welfare spending. This approach to job creation is completely backward and ripe for corruption and favoritism.
Consider the recent UPMC Pinnacle Lancaster closure here. Over 500 hospital workers were affected, with about 150 simply laid off.
When our local economy took this massive hit, one of the most frustrating aspects of the debacle was how much money taxpayers have given UPMC in grants and subsidies over the years. For example, two “OppGrants” totaling $5 million in Allegheny County, a “Pennsylvania First” grant of $300,000, and an “Urban Development” grant of $250,000.
And those are just some of the biggest. Let’s set aside for the moment that, with all its billions in revenue, UPMC manages to qualify as a tax-exempt, not-for-profit corporation.
Taxpayers are paying UPMC to create jobs, but what happens when they make them disappear instead? Unlike private investors or equity firms, corporations like UPMC have no accountability.
Every time I come across another local news story touting job creation based on grants or subsidies, it’s all I can do not to lose my cool. That’s especially true when they use euphemisms like “opportunity zone” or “economic revitalization.”
This year, state government will spend nearly $850 million on loans, subsidies, and grants to private businesses, according to the Commonwealth Foundation, a Harrisburg-based free market think tank. The horse racing industry alone will get a cool $230 million.
Can we call a spade a spade? Harrisburg politicians are cutting checks for well-connected businesses.
Sometimes the excuse is that a declining town or run-down city block needs some extra juice — so businesses who operate there get a nice pile of unaccountable money. Other times there is no excuse, like the (failed) nearly $6 billion backroom deal for Amazon’s HQ2 between Gov. Tom Wolf’s administration and Jeff Bezos, the richest man in the world.
I ran a general contracting company in the early 2000s. I was a job creator. Small businesses like mine — family-owned, serving a local community — are the secret ingredient to lasting economic development. We were thrifty and competitive, and we didn’t ask taxpayers for a handout or to shoulder our risk.
That’s why my position on this issue hasn't changed. If you asked my opinion on corporate welfare 20 years ago, I would have given the same answer: Let there be a level playing field, instead of politicians picking winners and losers. Small businesses shouldn’t foot the bill for taxes that could subsidize their biggest competitors.
Maybe that’s why job creators, and the educated workforce they need, have been fleeing the state. Young people in particular are seeking opportunity elsewhere. Pennsylvania lost more than 30,000 residents between the ages of 18 and 34 in the last six years — a “brain drain” that should ring alarm bells for policymakers.
Here’s how to reverse this trend: Reduce the sky-high corporate tax rate for all job creators. Cut back on burdensome regulations and licensing that represent barriers to employers and job seekers alike. Limit state spending growth to avoid deficits and the tax increases or borrowing needed to pay for them.
We can keep spending money on corporate welfare — handouts for Pennsylvania's richest — or we can put it back in taxpayers’ pockets, so they can invest it in their own communities and strengthen small businesses.
Which will provide a better return on investment?
Jeffery Williams is a small business owner and advocate for free-market reform from Lancaster.