DECEMBER 3, 2012
The New York Times is two days into a terrific and important series about the proliferation of the tax incentives desperate local and state governments dole out to businesses to set up shop within their borders. Today's story focuses on the granddaddy of them all, Texas, which, by the Times' count, gives out a whopping $19 billion in tax incentives every year.
I reported on Texas' corporate-welfare grab-bag as part of my profile last year of Rick Perry, who has greatly expanded the state's incentive program. But even I was shocked at some of what Times reporter Louise Story turned up, including the role of a tax consultant by the name of G. Brint Ryan. Ryan, who typically gets a 30 percent cut of the incentive award he secures for companies, has helped companies get tax incentives in more than half the states in the country, but specializes in Texas, where he and his wife have contributed more than $4 million to state politicians since 2000, and where more than a third of the awards from one of the state's biggest incentive programs, more than $80 million, has gone to Ryan clients. Ryan employed the former state treasurer before Perry named him to oversee an overhaul of the state tax system that left the incentives intact, and Ryan is now himself sitting on a commission named to review the incentive program.
It's a remarkable racket. But there's one angle that I thought the Times story could've emphasized more: health care.
The story does a good job of drawing the link between the Texas incentives and the state's woefully underfunded schools: not only do the state incentives leave less money for state funding for schools, but Texas cities and counties are engaged in a race-to-the-bottom of their own, awarding property tax exemptions that result in far less local tax revenue for schools.
The impact is no less deleterious for health care. Many of the jobs being lured to the state under the incentive programs are low-wage ones without good benefits, like the Amazon warehouse featured in the Times story, which got a slew of tax breaks and was eventually let mostly off the hook (with help from a Texas legislator who works part-time for Ryan) for a $269 million tax bill that resulted from its refusal to charge Texans sales tax on Amazon purchases. As a result, Texas has the third-lowest rate of employer-provided health insurance in the country -- only 61 percent of Texans under 65 are covered on the job. Meanwhile, doling out so many incentives -- thus slashing tax revenues -- leaves the state with far less money available for any sort of safety net. Texas has some of the most stringent standards for Medicaid eligibility in the country -- non-disabled adults without dependent children are ineligible, period, while parents must earn less than a quarter of the poverty level to be eligible. For a parent in a family of four, that means they must earn less than $6,000 per year. Put it all together, and you have the highest rate of uninsured in the country -- a quarter of the state population, about 6 million people.
The kicker, of course, is that the federal government did something to help Texas out of this bind: it passed the Affordable Care Act, which is geared above all to helping cover people in the states that lack the political will to care of the uninsured themselves. The law would bring Medicaid eligibility to a national threshold, 133 percent of the poverty level, with the federal government picking up 100 percent of the tab of the expansion in the first few years, sliding down to 90 percent in a few years. This would mean, essentially, a huge infusion of federal cash into Texas hospitals and clinics and doctor's offices. But Perry and Republican state legislators have deemed even the slight additional outlay that the state would have to make as part of this deal unacceptable, and are refusing to go along with the Medicaid expansion, as the Supreme Court's ruling on Obamacare allows them to do. So millions in Brownsville and Beaumont and elsewhere will remain uninsured. Meanwhile, G. Brint Ryan will continue collecting his cut.
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