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by Justin Owen

General Motors is now notorious for reaching deep into the pockets of taxpayers to bail itself out of a bad situation. In 2008, under the Troubled Asset Relief Program, or TARP, President Bush doled out the first round of what eventually became $50 billion to the Detroit automaker. With that, the United States government became a majority owner in the company.

This did not sit well with most taxpayers, who cried foul and rightfully so. Soon thereafter GM became known by the more appropriate moniker of “Government Motors.” Fearing a consumer backlash against it for this historic bailout, GM attempted to distance itself from the Washington scene. But taxpayers weren’t fully off the hook.

Rather than retool its business model to become competitive in the free enterprise system, GM turned to another, smaller government teat. Or several of them, actually. Since its grand TARP bailout, the company has received another $1.7 billion in taxpayer-funded grants and tax abatements, not from the federal government, but from states across the country.

Some might call this coincidence, but GM freely admits it is outright strategy. In a recent interview with TennesseeWatchog.org, a project of my organization, a company spokesman stated matter-of-factly that, “We are increasing our activity with the states obviously, in the communities in which we operate.”

How right he is. Not long after the TARP bailout, GM began ramping up its lobbying arm in several states—including Tennessee, Maryland, Indiana, and Texas. Over the next few years, public filings reveal the company doubled its lobbying expenditures in Tennessee, increased them by 60 percent in Indiana, and by 78 percent in Texas, while also hiring in-state lobbyists in each of the states to give it the proverbial boots on the ground.

The payoff was handsome. State officials in Tennessee just awarded GM more than $1.5 million in grants, part of which went to reopen a plant in Spring Hill, Tennessee. This comes on the heels of a $17 million taxpayer handout in 2009, after which the company immediately packed up and shipped the jobs it had promised Tennesseans back to Michigan. With this track record, there is no certainty it won’t happen again if another state forks over more money to lure them away.

GM’s increased lobbying efforts also helped the company obtain a $3 million grant through the Maryland Economic Development Assistance Fund and a $1.5 million grant from the Maryland Department of Labor, Licensing and Regulation. In 2009, local Indiana officials announced a $2 million incentive package for the GM assembly plant in Fort Wayne. And in Texas, the company recently applied for refunds on state sales and use tax payments through a state incentive program. For GM, the savings would amount to $3.75 million.

Apparently, turning taxpayers on their heads and shaking every penny from their pockets is a profitable corporate strategy for a quasi-public car company. As of last summer, GM sat on roughly $40 billion in reserves. Yet the ribbon-cutting ceremonies with state officials across the country continue like clockwork, with taxpayers footing a lofty bill.

All the while, GM touts that it has paid back the billions of dollars that taxpayers used to prop it up in 2008. That claim itself is misleading, but even the amount it has returned to the federal government has essentially been funded—in part—by those same taxpayers via state governments. This adds a whole new meaning to the phrase “in one hand and out the other.” One thing is for sure, four years after TARP, GM has proven that it can still take taxpayers for a ride.

Justin Owen is president & CEO of the Beacon Center of Tennessee, the state’s free market think tank. 

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NASHVILLE – The Beacon Center of Tennessee, founded as the Tennessee Center for Policy Research, today made available in electronic version its most recent publication, An Idea a Day: 51 Ideas for a Prosperous Tennessee. The second of its kind, the pamphlet offers one innovative free market idea for each remaining legislative day of the 107th General Assembly. Each idea is surmised in one brief sentence, followed by a link to original work published by the Beacon Center or contact information for more details.

Hardcopies of the pamphlet will be provided to each member of the General Assembly upon their return to session in January. The electronic version was sent to members and their staff today as the Legislature prepares for the second session of the 107th General Assembly.

“When lawmakers look for solutions that will expand individual liberty, return taxpayers’ hard-earned money to their pockets, and reduce the size and scope of government, they now have a place to turn,” said Justin Owen, the Beacon Center’s president & CEO. “We hope members of the General Assembly will frequently turn to this simple, concise resource as they conduct the people’s business.”

A new feature was added to the second edition of An Idea a Day, with a special emblem marking ideas that will create jobs and/or save taxpayers money. This makes it easier for lawmakers to identify those issues that are a top priority for taxpayers: job creation and tax cuts.

The electronic version of the pamphlet, complete with links to original Beacon Center work on the ideas offered, can be viewed by clicking here or visiting http://www.beacontn.org/wp-content/uploads/An-Idea-a-Day-2012.pdf.

The Beacon Center of Tennessee’s mission is to change lives through public policy by advancing the principles of free markets, individual liberty, and limited government. The Center is an independent, nonprofit, and nonpartisan research organization committed to providing timely free market solutions to public policy issues in Tennessee.

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Dear Governor Haslam,

We are encouraged, this year, by your leadership and the work of the Tennessee assembly members to promote a friendlier economic environment for Tennessee’s family business owners, family farmers, and their many employees. In particular, we are encouraged by many members who have publicly vowed to work towards eliminating Tennessee’s Inheritance Tax which is a major obstacle to the survival of family owned businesses and farms.

It is true that while serious reforms like eliminating the death tax present short-term challenges, they are necessary steps towards leaving a legacy of economic prosperity in Tennessee and promoting job creation from the most productive sector of the economy – family businesses.

A recent study on the Tennessee Inheritance tax by Laffer Associates states that “Tennessee’s estate and gift tax is the single greatest reason why wealthy people don’t want to live in Tennessee.” For those that continue to operate in Tennessee, the looming Death Tax burden ties up their working capital in expensive estate plans and life insurance policies. Tennessee’s estate and gift tax, the study claims, has already reduced state GDP by up to $18.2 billion over the past ten years. In addition, the robust economic growth resulting from elimination of the state’s inheritance tax, would have added at least $7 billion to state coffers over the last ten years. The tax currently accounts for less than 1% of total state revenues.

The conditions for repeal will never be as favorable as now. We are concerned about some of your recent statements indicating a reluctance to usher through repeal of the Tennessee Inheritance Tax in 2012. We are, however, confident that with your leadership and the support of a very motivated legislature, this important policy measure will be pursued.

Many winning candidates’ top tax issue, and a pillar of your pro-growth platform during the 2010 election, was promoting the complete repeal of the Tennessee inheritance tax. With control of the Governor’s office and state legislature in Republican hands, now is the time to push forward to swiftly eliminate the Tennessee Inheritance Tax.

The state of Ohio recently repealed their state Estate Tax, making Ohio a more attractive place to keep capital and grow businesses. This was a widely reported and nationally touted victory. We strongly encourage you to work towards full repeal of the Inheritance Tax at the beginning of the next legislative session.

Please contact us if we can be of assistance in this crucial effort.

Sincerely,

Dick Patten, President, American Family Business Institute
Grover Norquist, President, Americans for Tax Reform
Tim Phillips, President, Americans for Prosperity
Duane Parde, President, National Taxpayers Union
Justin Owen, President and CEO, Beacon Center of Tennessee

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NASHVILLE – The Beacon Center of Tennessee (formerly the Tennessee Center for Policy Research) today announced the Wine & Spirits Wholesalers of Tennessee as the recipient of its 2011 Lump of Coal Award.

The Beacon Center awards this dubious distinction annually to the person or group in Tennessee who, more than any other during the past year, acted as a Grinch to Tennesseans by bah-humbugging the principles of liberty and limited government.

For the first time, the 2011 Lump of Coal Award was chosen directly by Tennesseans in an online poll. Respondents chose from a list of five finalists selected by Beacon Center staff. The Wine & Spirits Wholesalers received the most votes for the not-so-coveted prize, beating out Nashville’s Metropolitan Development and Housing Agency by a single vote.

The Lump of Coal Award goes to the association for its actions to prevent grocery stores from selling wine in the state, a measure that 33 states allow and one that would benefit Tennesseans economically.

“The liquor lobby, led by the Wine & Spirits Wholesalers of Tennessee, has used questionable tactics to scare rural Tennesseans and lawmakers into erroneously believing that allowing grocery stores to sell wine will bring about some type of booze-propelled chaos, all in an effort to protect its powerful monopoly over wine,” said Justin Owen, the Beacon Center’s president and CEO.

“Despite the fact that nearly three out of four Tennesseans want to end the Prohibition-era restrictions on wine, their calls were yet again drowned out by this formidable lobbying force. Maybe the association’s leadership can wash down its lump of coal with a nice bottle of cabernet, purchased exclusively from a liquor store, of course.”

The Beacon Center of Tennessee is an independent, nonprofit, and nonpartisan organization committed to providing free market solutions to public policy issues in Tennessee. Through research, advocacy, and investigative reporting, the Center advances ideas grounded in the principles of free markets, individual liberty, and limited government.

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“The more you extend unemployment benefits to someone who’s jobless, the less likely it is that they’ll take the necessary measures to go out and find a job,” said Justin Owen, CEO of the free-market think tank the Beacon Center of Tennessee. He supports the Republican plan of tying benefits to a work program.

“We’re not trying to attack those who have lost their jobs,” he said. “It’s the extension of it that’s become problematic. When you go from 26 weeks to 99 weeks, that’s a substantial expansion of this. And it’s not only an expansion that hurts the people it’s trying to help, it also hurts the taxpayers.”

Read the entire article here.

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by Justin Owen

For the past six years, the Beacon Center of Tennessee (founded as the Tennessee Center for Policy Research) has ranked the state’s 50 most populous cities according to their business climate. The categories we choose reflect cities’ commitment to creating a business-friendly atmosphere based on strong economic vitality and community allure, and free of stifling taxes and restrictive regulatory burdens.

Cities with low tax burdens, less regulation, quality education systems and low crime rates fare better at attracting and retaining business than those with high taxes, burdensome red tape, poor schools and high crime. Since people “vote with their feet,” these factors often lead to population and job growth, which more directly signal a city’s commitment to economic strength.

Each year, cities are ranked by data compiled and placed into three categories: Economic Vitality, Business Tax Burden and Community Allure. These categories included factors such as job and population growth, tax burdens, household income, cost of living, crime rates and education statistics, all important measures for determining how friendly a city is to business growth.

After culling data from various reputable sources, including the U.S. Census Bureau, the FBI and the Tennessee Department of Education, our rankings indicate that the Town of Farragut is Tennessee’s Most Business-Friendly City.

The Knox County city has consistently scored high in the rankings due primarily to its low tax burden — it lacks a city property tax and is the only top 50 city that chooses to impose no gross receipts tax on businesses. It also posted strong job performance, a low crime rate and higher than average median income levels, leading it to a first place finish in 2011.

Four Middle Tennessee cities round out the top five. Brentwood, Franklin, Mt. Juliet and Spring Hill follow Farragut’s lead with low tax rates and positive job growth over the past year.

On the flipside, Memphis finished dead last for the second consecutive year. The Bluff City has consistently failed to address its education woes and has an abhorrently high crime rate. It also imposes a property tax that is nearly 16 percent higher than that of any other city in the state.

Other cities ranking toward the bottom posted similarly high tax rates, low income for residents, and low education results. Taken together, these factors can drive away businesses seeking to expand or relocate.

Cities that want to attract new business development while also nourishing existing enterprise should follow the lead of Farragut by limiting their tax burdens, addressing crime, and maintaining a quality education system. This will attract new residents and thereby business growth regardless of the overall economic outlook.

As Farragut has proven, a city can be business-friendly even during periods of economic malaise. For that reason, the Beacon Center is proud to bestow the town with the honor of being Tennessee’s Most Business-Friendly City in 2011.

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