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Kleptocrat’s Club– the NH Business Finance Authority
A US corporation pays 35% in Federal tax, then pays state income tax. Then the investors pay 15% income taxes on their dividends, and capital gains taxes on the nominal “increase” in value of their shares… not adjusted for inflation. And if the investors actually try to USE “their” money inside the US, they are then taxed again with sales, property, and/or excise taxes. Correcting for the possibility of investment losses, the investor gets far less than half of the value that she created with her investment.
The Obama Administration is trying to increase the double taxation by taxing dividends at the full (39%) rate of ordinary income. (By comparison, “communist” China only taxes corporate income at 25% and dividends at 10%). This of course, is only for those losers like you and I, those not a member of the Kleptocrat’s Club.
For members of the Club, life is a continuous success story. It doesn’t matter whether your products are terrible (GM) or even imaginary (Goldman Sachs). All that matters is the continuing flow of freshly printed money into your business. It’s like being a medieval noble; you can do no wrong. The courts will always find in your favor, you are never subject to the humiliations of peasants (airport security, police raids, etc.) All that you need is a little modification of language: “counterfeiting” becomes “quantitative easing”, “theft” becomes “stimulus”, and so on. After enough repetition, the peasants will believe that your wealth causes the Sun to rise in the morning, and that they must thank you for allowing them to pay for your palaces and the subsidies for your unprofitable businesses.
So the goal of modern social climbers is to become part of the Club. If you can’t arrange to be born into the families that control access to the national Club, you can still have a consolation prize: you can start a state-level business subsidy office.
Kleptocracy in the “Live Free or Die” State
The NH Business Finance Authority has the distinction of being more secret than the NSA. There isn’t even a Wikipedia article on the Business Finance Authority. Nor are any of its financial statements online. I had to make a 91-A request to obtain its annual reports to the governor. As the state refuses to put the annual reports online, the NH Liberty Alliance will soon have them on its website, in our continuing struggle for transparency.
So there won’t be any links in this article. If you want to check my figures, just email a 91-A request to the director, good old Jack Donovan firstname.lastname@example.org. If that doesn’t work, go over and pound on the door at 2 Pillsbury Street Suite 201 Concord, NH 03301. Or just call (603) 415-0190. The staff loves to hear from the ordinary working people that pay their salaries.
According to the first page of the 2011 Annual Report, the BFA has transferred over 1.4 billion dollars from we lazy, undeserving taxpayers (and all holders of dollar balances) to those who truly earned the money (by filling out BFA forms). The BFA states that it has “helped” 4,375 businesses since 1992. I’m sure that is true. Unfortunately, the report fails to mention that the BFA HARMED all the other businesses and workers in the state, by diverting money to the politically favored.
Anheuser-Busch, 12 million dollars, in 2011. Anheuser-Busch is actually owned by InBev, a Belgian-Brazilian beer conglomerate which bought the Clydesdales for $52 billion in 2008. Obviously, this is a company which needs to be subsidized by NH state government. Otherwise Granite Staters might have to drink Sam Adams or some local microbrew that actually tastes like something.
Lonza, the Swiss biotech company, $35 million in 2011, $25 million in 2006, $30 million in 2003.
Waste Management, the garbage giant: $20 million in 2001, 20 in 2002, 15 more in 2004.
Sig Arms, makers of fine pistols (except for early model P238s), got $1.75 million in 2003.
But the BFA doesn’t just help big business. It also helps upper-crust schools and government media outlets.
Kimball Union, a private school that charges over $46,000 per year per student, got over a million in 2001. This is a critically important use for money that might otherwise be wasted on less important children in the other private schools around the state, most of whom charge less than 12K per year.
Seacoast United Soccer got 3.7 million.
NH “Public” Radio got $6 million dollars in 2008 to help fund its mission to elect more Democrats in New Hampshire.
Not to slight print media, in 2010 the BFA bought some Pennsylvania company a nice NH newspaper, the Claremont Eagle Times. .
Reverse Robin Hoods
Like hundreds of other corporate-welfare bodies around the country, the Business Finance Authority’s subsidies to the rich don’t show up as a line item on the NH state budget. It does give out some direct freebies, like weatherization grants. But mostly it works in the shadows, by “guaranteeing” bonds, and/or granting the right to certain corporations to issue tax-exempt bonds. Being tax-exempt “lowers the cost of financing”, the BFA helpfully explains in its reports (apparently the wealthy recipients would not be clear on this otherwise). Overall, since 1992 the BFA has doled out $399 million in loan guarantees, and $1.008 billion dollars in tax-exempt or other subsidized bonds.
The BFA has long lists of “impacts”; numbers of jobs created, number of jobs preserved, how many “Local Development Organization Loan Pools” they funded. The reports are missing the only important statistics: how many jobs were lost by unsubsidized businesses, and how much poorer the state is as a result. If anyone thinks that the best investment decisions are made by state bureaucrats, you’d better let someone else run your IRA.
Mr. Donavan, the director, was very concerned that I might ask him for the figures on the “loan loss rate”. He needn’t have worried. The “loss rate” on any government program to steal from one business to give to another is always 100%… it causes the participants to lose 100% of their honesty.
New Hampshire has fewer business subsidies than most states. But we shouldn’t have any. “Live Free or Die” doesn’t leave any room for stealing from the poor to give to the rich.