Here we go again!
As tens of thousands of Connecticut families struggle to pay their local property taxes due to the state’s inadequate funding of public education, Governor Dannel Malloy is giving scarce public funds to some of the wealthiest companies in the country.
As the Hartford Courant reports today in their article entitled, “State Proposes $52 Million In Subsidies To Giant Hedge Fund,”
Bridgewater Associates, the world’s largest hedge fund, can qualify for up to $52 million in tax credits, grants and a loan from taxpayers as it renovates and expands its headquarters in Westport, state officials say.
Bridgewater Associates, which has about 1,500 employees, originally was offered a $115 million incentives package in the state’s First Five program, but it abandoned its plan to build a new headquarters in Stamford after local residents’ opposition. (See: Bridgewater Associates Abandons Plan To Build in Stamford.)
Although it has not been widely reported, before Bridgewater Associates “abandoned” their move to Stamford, the Malloy administration spent millions to help Bridgewater Associates facilitate the move.
But today’s news means that while Governor Dannel Malloy effort to “lure” Bridgewater Associates from Westport to his pet project called Harbor Point in Stamford with that $115 million publicly financed corporate welfare package failed, Connecticut’s taxpayers are now being put on the hook to give Ray Dalio and his gigantic Hedgefund $52 million to help subsidize a half-billion dollar upgrade to their Westport corporate headquarters.
For those who haven’t followed the saga, the following Wait, What? posts are worth a read;
See: NEWSFLASH – I gave a billionaire $115 million today (and if you’re from CT, so did you!) (8/15/2012); Yes, you heard right…CT taxpayers give $115 million to Bridgewater, world’s biggest hedge fund (8/19/2012); Slam-Dunk! Touch-down! Goal!!!! Taxpayers come through for American’s highest paid CEO (1/11/2013) and “This is stealing from the poor and middle class to make a billionaire even richer” (6/27/2014)
The background to this latest development is that for more than three years, Malloy has been working to hand taxpayer money over to Ray Dalio, one of Connecticut’s 16 billionaires.
According to Forbes Magazine, Dalio is a high-ranking member of the list of “The World’s Billionaires.”
Dalio’s worth is estimated at $15.5 billion, bolstered by income of more than $1 billion last year. His annual salary is down sharply from 2011 when Dalio earned $3.9 billion, making him the highest paid person in the United States. As of now, Dalio ranks #30 on Forbes list of the richest 400 and #2 among Hedgefund owners. The number of billionaires who call Connecticut home has actually jumped from 9 to 16 since September 2014.
According to the latest announcements, Malloy’s new plan is for the state of Connecticut to borrow $17 million at about 3 percent a year and lend it to Dalio’s company with a rate of 1 percent interest.
The Courant reports added that,
“The entire loan could become a gift, depending on how Bridgewater meets its job creation targets. But the exact terms are still being negotiated”
In addition to the $17 million loan, the Malloy administration will be giving Dalio and his company $2 million for employee training and $3 million to subsidize the company’s energy costs. Apparently these funds would also come from money that the state has borrowed as part of its economic development activities, meaning the long term cost to taxpayers is actually significantly higher than $5 million.
Finally, Dalio and his company would also be given $30 million in tax credits over the next 10 years under the “Urban and Industrial Sites Reinvestment Program.” The actual impact of the tax credits would be that Bridgewater’s tax liability to the state of Connecticut would drop by $30 million.
As to how Malloy can get away with using money for urban renewal on a project in Westport, the Hartford Courant explains,
“Westport is not a distressed city, and the office park is not a brownfield, but because Bridgewater Associates’ investment is so large, it qualifies for the credits.”
Malloy’s rationale appears to be his ongoing reliance on the old theory of “trickle-down” economics which claims that if government uses its taxing and expenditure policies to redistribute wealth from the Middle-Class to the rich, the wealthy will be able to create even more wealth which will then trickle down to the rest of society via more jobs and higher tax revenues.
As if to reiterate how the economic strategy as consistently failed, Reuters is reporting today that;
“Hewlett-Packard Co, which is splitting into two listed companies later this year, said on Tuesday it expects to cut another 25,000 to 30,000 jobs in its enterprise business as the tech pioneer adjusts to falling demand.
The latest cuts, on top of layoffs of 55,000 workers previously announced under Chief Executive Officer Meg Whitman.”
As the independent think-tank, Citizens for Tax Justice has reported, Hewlett-Packard Co, has been a major recipient of taxpayer funded corporate welfare. In addition to direct subsidies, HP ranks #13 on the list of major corporations that have the most money hidden in “off-shore investments” in order to avoid paying federal and state taxes (See: Offshore Shell Games 2014 The Use of Offshore Tax Havens by Fortune 500 Companies.)
Citizens for Tax Justice notes,
“As of 2013, the 287 Fortune 500 companies that report holding offshore cash had collectively accumulated close to $2 trillion that they declare to be “permanently reinvested” abroad. That means they claim to have no current plans to use the money to pay dividends to shareholders, make stock repurchases, or make certain U.S. investments. While 72 percent of Fortune 500 companies report having income offshore, some companies shift profits offshore far more aggressively than others. The thirty companies with the most money offshore account for nearly $1.2 trillion. In other words, six percent of Fortune 500 companies account for 62 percent of the offshore cash.”
Corporate Welfare didn’t work with Hewlett-Packard Co, and won’t work with Ray Dalio’s Bridgewater Associates…but that fact certainly isn’t stopping Governor Dannel Malloy from giving one of Connecticut’s billionaires $52 million more of our money.