http://www.corpwatch.org/article.php?id=12540http://www.corpwatch.org/Lurking within the records of most cities and states in America there lies a scandal. A tax scandal. A jobs scandal. A corporate and political scandal. It's the Great American Jobs Scam: an intentionally constructed system that enables corporations to exact huge taxpayer subsidies by promising quality jobs - and then lets them fail to deliver. The other benefit often promised - higher tax revenues - often proves false or exaggerated as well.
Take for example: New York City, which must hold the record for job blackmail, though it is hardly alone. One study of 80 companies that had received "retention" subsidies from the Big Apple found that at least 39 had later announced major layoffs, or they had entered into large-scale mergers or put themselves up for sale - events that usually trigger mass layoffs. A detailed analysis of 10 subsidized companies found they had a total loss of more than 3,000 jobs.
Bank of America, for example, received two "job retention" subsidies from New York City, in 1993 and in 2004. The 1993 subsidy was given to induce the bank to move employees into the World Trade Center following the 1993 bombing. In exchange for at least $18 million in benefits, the bank promised to retain at least 1,700 jobs in Tower One for 15 years. Instead, it laid off at least 800 people in 1997 after merging with Security Pacific National Bank. This was such a severe drop in employment that the city canceled the subsidy in 1998, but didn't require Bank of America to refund any past subsidies.
After it was displaced by the attacks of September 11, 2001, Bank of America won a new subsidy in 2004 for the consolidation of several offices into a new headquarters building in midtown Manhattan. The deal is supposed to retain 2,995 jobs and create as many new jobs over 25 years. The state and city offered a total package of $82.6 million. The Bank also got $650 million in triple-tax-exempt "Liberty Bonds," special low-interest loans enacted for New York City following the September 11 attacks. But shortly after the deal closed, Bank of America merged with Fleet Bank (which had also received an NYC job-retention subsidy). The new entity announced it would cut a total of 17,000 jobs nationwide. The overall job impact on New York City was unknown as of late 2004.
Scams like this cost taxpayers an estimated $50 billion a year...
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