If you asked a room full of entrepreneurs and small business owners how to create a successful business, you probably wouldn’t hear “Get the biggest tax incentive” on their list.
But that’s how local governments are giving many corporations a leg up on their competition.
Corporate welfare, or giving tax breaks to companies that promise to locate to—or not leave—a city, is a policy that has cost taxpayers billions. And while tax breaks and incentive packages are sold as ways to bring jobs to a community or retain a company that’s threatening to leave, after the ribbon cuttings are over and the press releases have been sent, the local businesses killed and the jobs destroyed are rarely discussed.
That’s what the Beacon Center of Tennessee set out to change.
Elevate, educate, and influence
Over the last 10 years, Tennessee has given out more than $3 billion in taxpayer-funded corporate welfare. The Beacon Center recognized how this wasn’t only a policy that hurt Tennessee taxpayers and small businesses, but it was also an issue that many voters and taxpayers didn’t even recognize as a problem.
Corporate welfare in Tennessee is used by local and state politicians to lure companies to cities that are so uncompetitive that many businesses can’t afford to set up shop there without a tax break. As Beacon Center’s President and CEO, Justin Owen puts it, “the government is admitting that ‘our tax policy is so bad that we have to essentially give one company a handout to come here’.”
Research from Beacon also showed how many corporate welfare programs didn’t actually result in any new or sustained jobs for local communities, but still cost taxpayers millions and forced existing businesses to close.
The Beacon Center’s leadership team knew that to have real impact in changing Tennessee’s pernicious culture of corporate welfare, they would need to elevate the issue as a whole, educate the public, and influence the discussion among policymakers.
And while quality data and insightful analysis would be essential to a successful project, creativity along with innovative strategies and messaging would be the only way to achieve real results.
Corporate welfare is hurting people, their stories matter
All state think tanks in the SPN Network are working to help Americans thrive through policy solutions that increase personal freedom and opportunity. Oftentimes, the most successful education projects incorporate the power of personal stories to show how policy makes a difference in the everyday lives of Americans.
To depict the real impacts of corporate welfare, the Beacon Center produced the organization’s first documentary short film titled “Rigged.” The film told the story of two furniture store owners in Memphis who were struggling to stay afloat after Memphis gave Ikea Furniture $9.5 million in tax incentives to open a store in the city.
The short film shows viewers the reality that corporate handouts create for small businesses all over Tennessee. Small business owners are not only forced to pay high taxes and deal with burdensome regulations, but also pay for the tax handouts going to their new corporate competition.
“Rigged” proved to be an innovative way for Beacon to show people the other side of the ribbon cuttings and political talking points. The film itself won multiple film festivals, had hundreds of thousands of views online and garnered media attention rarely given to policy discussions like the one surrounding this issue.
“Rigged” also allowed Beacon’s policy team to engage with lawmakers like few think tanks have before.
Beacon’s policy team held workshops for many state lawmakers to help educate them on the biggest policy needs for the volunteer state and engage with them on the solutions to move Tennessee’s economy forward. Since tax incentive packages are often viewed by lawmakers—both Republican and Democrat—as positive opportunities to grow jobs, these workshops provided the perfect opportunity to show the unintended impacts that corporate welfare can have on local economies. In these workshops, Beacon’s team showed lawmakers “Rigged” and gave them the data and tools they would need to fight for true business-friendly policies.
And finally, Beacon’s team utilized Tennessee’s gubernatorial election to not only elevate the issue of corporate welfare, but deliver their message directly to the next leader of the state.
Beacon hosted live one-on-one interviews with both candidates for governor on Facebook and used their direct access to both candidates to ask them their positions on how—and if—corporate welfare should be used.
While election-time interviews are hardly ironclad guarantees, by engaging directly and on-the-record with the next governor of Tennessee about the dangers of corporate welfare, Beacon elevated the issue and shaped the debate.
Win on the facts
When talking about their campaign, Beacon Center’s Director of Marketing and Communications Mark Cunningham said, “It’s up to us to make people reevaluate these policies. Because if someone reevaluates, we can win on the facts.”
The Beacon Center recognized how pernicious and toxic the practice of corporate welfare has become in Tennessee. But instead of simply producing a report or putting out a press release that might influence a single bill or garner a media hit, Beacon looked for a way to elevate the entire issue and change how it’s viewed as a whole.
Beacon’s fight to change Tennessee’s harmful corporate welfare policies is far from over. They are continuing their fight this coming legislative session by pushing for more transparency into each tax incentive handed out and engaging with even more lawmakers.
And Beacon isn’t alone in their fight against the corporate welfare policies hurting small businesses. Other SPN Network members like the Mackinac Center in Michigan,the Commonwealth Foundation in Pennsylvania, and the Mercatus Center are all speaking out against these destructive policies.
The Beacon Center, like all SPN members, recognizes that winning free-market policy solutions is a long-term project. But by not accepting small or easy victories, they are giving those solutions a real chance to thrive. Beacon Center’s work on corporate welfare was recognized at SPN’s 26th Annual Meeting in Salt Lake City, where Beacon was awarded the Bob Williams Award for Outstanding Policy Achievement in the category of “Best Issue Campaign.”