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Published on Friday, September 26, 2003 by the Denver Post
by Reggie Rivers
Let me make sure I understand this correctly: Here in Colorado, a state that largely deplores welfare, affordable housing assistance and other entitlement programs, the city of Denver wants to give $10 million in welfare benefits to Wal- Mart?
To give you some perspective, in fiscal year 2001, the state of Colorado spent $94.4 million on Temporary Assistance for Needy Families (welfare). This $10 million gift to Wal-Mart would be just one of many similar deals that corporations in the state receive every year. (Note: the federal government provides another $115 million for Colorado's welfare programs).
But I shouldn't be too judgmental, because if anyone deserves welfare, it's Wal-Mart. Let's face it: Alice, Helen, Jim and John Walton, the family members who own 38 percent of the company's stock, aren't doing so great.
Their combined net worth of $66 billion places them in spots No. 7 through No. 10 on Forbes list of the world's richest people. With just a little help from cities like Denver, the family might be able to climb up into the middle class (places No. 4 through No. 6).
The Waltons have a net worth greater than the gross domestic product of a couple of countries we've invaded: Afghanistan ($19 billion) and Iraq ($58 billion).
Here's the deal: Khanh Vu, the owner of the Alameda Square shopping center, has agreed to sell the property to Wal-Mart for about $12.5 million. That sounds perfectly fine. Good for him. Good for Wal-Mart. However, the supermarket giant said it won't buy the property unless the city offers $10 million in tax breaks.
Imagine if you were selling your house and your best offer was $500,000. But the buyer said he wouldn't come through on the deal unless the city threw in 10 years of tax abatement. Would you call the mayor and ask for help? Do you think you'd get it?
You would if the buyer was Wal-Mart. The city is nearly falling over itself to surrender this tax revenue even though we're suffering a severe budget crunch. Complain about the poor all you want, but this deal reveals that it's really big business that has the courage to demand handouts, and the clout to get them.
According to the Treasury Department, all 50 states spent $18.6 billion in federal welfare funds in FY 2001. Author Noreena Hertz wrote in the book "The Silent Takeover: Global Capitalism and the Death of Democracy," that direct subsidies to American corporations total more than $75 billion annually.
The rationale for these tax breaks is that Wal-Mart will improve our economy and tax base, but I don't know if that's true.
Denver economic development officials estimate that Wal-Mart would generate $12.2 million in new taxes between its opening and 2016. In 2001, the city collected $125,263 in sales taxes from the current tenants in the shopping center.
If nothing changes, the center will produce about $1.6 million in sales tax between now and 2016. That hardly compares to the revenue Wal-Mart would generate, but remember, Wal- Mart will get a $10 million subsidy that will negate most of that tax benefit. Plus, the city says it will buy out the current tenants and pay their relocation costs.
Will this new Wal-Mart generate jobs? How many people work at the shopping center now? How many will work at Wal-Mart when it opens? Will the new Wal-Mart employees move here from other cities? Or will they be current residents who merely leave their old jobs to take up new employment?
"The Silent Takeover" reports: "Study after study reveals no statistical evidence that business incentives actually create jobs."
Before we give a big welfare check to Wal- Mart, shouldn't we make sure that we're going to benefit from it?
Former Denver Bronco Reggie Rivers is the host of "Drawing the Line" Wednesdays at 8 p.m. on KBDI Channel 12.
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