by Ben Davis
In an investigative piece for the Boston Globe, Washington Bureau Chief Christopher Rowland computes corporations’ return on investment from lobbying. The calculations are simple – he divides corporations’ federal tax breaks by lobbying expenditures – but the results are eye-opening.
For example, take the $11 billion in tax breaks awarded to General Electric, Citigroup and Ford Motor Co., divide them by the funds spent on lobbying over two years, and the companies earned an 8,200 percent return on investment.
Or take Whirlpool, the home appliance company, which received tax credits of $120 million and spent $1.8 million on lobbying, earning a 6,700 percent return on investment.
With such high returns on investment, it is no wonder that lobbying for tax breaks is on the rise. The number of companies lobbying on tax issues has increased 56 percent – from 1,200 to 1,868 – between 1998 and 2012, and we should expect this number to continue to increase.
So with tax breaks to corporations unlikely to diminish anytime soon, we should make sure that future breaks follow a set of best practices to ensure the government expenses are a smart use of taxpayer dollars:
First, the public has a right to know the recipients, dollar value, public benefit to be produced (e.g. number of jobs), and public benefit actually produced for tax breaks given to corporations. For the past several years we have documented states’ progress toward making this information easily accessible to the public, and the federal government should follow the lead of many states that already provide this information.
Second, corporations should be banned from contributing to electoral campaigns. During the 2012 election cycle, General Electric, Citigroup and Ford donated $7 million to federal candidates, and Whirlpool donated $118,000. Contributions like these can cause elected officials to award tax credits that benefit special interests above the public interest.
Third, the funds spent by corporations on lobbying, the issues discussed at lobby meetings, and the lobbyists hired should be fully disclosed, empowering the public and watchdog groups to ensure corporate tax breaks benefit the overall public interest and not just the self-interest of companies. In addition, citizens and public interest advocacy groups should be vocal on Capitol Hill to make sure the public interest is upheld.