Tennessee Taxpayers Gave $1 Billion in Corporate Welfare Last Year


You, the taxpayers of Tennessee, helped give away nearly $1 billion in tax credits to corporations who set up shop here last year.

State law, as it turns out, forbids you from finding out exactly what kind of return you’re getting on your investment. In other words, even though the money came out of your wallet, you may not know how any one corporation spent it.

For this, you can thank Tennessee’s confidentiality laws.

Mark Cunningham, spokesman for the Nashville-based Beacon Center of Tennessee, a free market think tank, said state officials hide behind them.

“Beacon wants the books to be completely open when it comes to corporate handouts,” Cunningham said.

“If you are getting money from the taxpayers then we should know how many jobs you are creating and what that money is being used for. If you are taking our money then you don’t get to hide behind these walls, in our opinion.”

When there’s more transparency with these tax credits then there’s more clarity. When there’s more clarity about what, precisely, corporations do with this money then there’s more likelihood the taxpayers will dislike it, Cunningham said.

The state’s powers that be, of course, bestow these tax credits all in the name of economic development. The greater the number of corporations in Tennessee, the thinking goes, the greater the number of jobs.

But Cunningham said that tax money ought to come with a few caveats.

“Ultimately, we need some type of law to force the recipients to disclose the amount of jobs created,” Cunningham said, adding the Beacon Center’s partner, Beacon Impact, is looking at potential transparency legislation on that for next year.

According to the Nashville Business Journal, tax credits differ from cash grants. Cash grants, the paper went on, “attract much more attention and scrutiny, partly because the state is more forthcoming about those incentives.”

The Nashville Business Journal used AllianceBernstein as an example of a firm coming to the state that will receive an unspecified amount of tax credits next year.

According to the paper, State Sen. Jeff Yarbro (D-Nashville) sponsored legislation that forced state officials to reveal more information about the credits.

That report showed that more than 2,000 companies saved $153 million from their tax bills during the state’s 2016-17 fiscal year.

“The report also says companies entered that 2016-17 fiscal year with $987.6 million of tax credits they had earned in prior fiscal years but not yet claimed,” according to the Nashville Business Journal.

“Under state law, a business has as many as 15 years to claim tax credits for creating jobs. For a job created in 2018, for example, the state might not reduce a company’s tax bill until the early 2030s.”

The largest business tax credit, the paper went on, does not require jobs get created.

“The credit is tied to how much manufacturing companies spend to buy or upgrade equipment and machines. More than 1,500 companies claimed that tax credit in 2016-17, requiring the state to forgo $62 million of revenue,” according to the paper.

“For the most common tax credit tied to jobs, 301 companies claimed $36.6 million of credits in the 2016-17 year — for creating a reported 8,400 jobs.”

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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected] 







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  1. Ernie Moore

    Please put on mailing list..