Friday, April 23
by Rob Duffey


Goldman Sachs keeps making headlines.  First, it is charged with fraud by the SEC for allegedly profiteering off of the financial crisis its fellow banks helped create, and a week later it reports record profits of $3.46 billion - a 91% increase over last quarter.

On Wednesday, the Better Choices for New Jersey Campaign went to Goldman Sachs Tower in Jersey City to point out another little discussed fact: the state of New Jersey helps make Goldman's bottom line possible through direct cash subsidies at a cost to taxpayers estimated to be in the tens of millions. In one of the worst budget years on record, when the state is considering billions in cuts to vital services, the nonpartisan New Jersey Policy Perspective estimates that the state stands to pay an estimated $18 million to Goldman Sachs in the coming year.

That's because Goldman Sachs, like 207 other corporations, receives subsidies from the state's Business Employment Incentive Program (BEIP). The program is administered by the New Jersey Economic Development Authority and offers cash grants to businesses for 10-80% of the gross income taxes withheld for the jobs claimed. Over the last twelve years, New Jersey has paid Goldman Sachs $57,967,304 through two BEIP grants and two more have been awarded but not paid out. For the two grants that have been paid, Goldman Sachs has received the highest possible percentage of subsidy for a BEIP grant - 80% of income taxes for jobs 'created' in New Jersey.

But created is a flexible term, especially in the case of Goldman Sachs and the other big financial companies that receive subsidies through BEIP. In 2006 and 2007, Goldman Sachs reported only 8.6% of its 2,567 workers at the tower on 30 Hudson Street in Jersey City as local residents.  A representative admitted to the Jersey Journal in 2007 that the low percentage is due to the fact that most of the workers had been employed with the company in New York City.

In theory, these subsidies are meant to draw corporations into the city - but there is little evidence that subsidies convince businesses to do anything they wouldn't do anyway. What draws corporations to a location are underlying factors - a highly trained and educated work force, top notch universities, affordable health care, and a strong mass transit system. In the case of Goldman Sachs, New Jersey is giving taxpayer dollars to a hugely profitable company to move highly paid workers to an already attractive location - and subsidizing them for almost the full amount of the income tax revenue the grants are supposedly intended to bring in.

Goldman Sachs isn't alone in receiving state subsidies. In total, New Jersey has paid out $95,027,323 million to financial companies like A.I.G., Citigroup, and Morgan Stanley - companies that have received billions in federal bailout dollars through the Troubled Asset Relief Program. Next year, the state could spend an estimated $32,850,948 more on those same companies. In total BEIP awards could cost New Jersey taxpayers $201 million for FY 2011.

We are in the middle of the worst economic crisis since the Great Depression. New Jersey faces a multi-billion dollar budget gap, and working families around the state are facing the prospect of higher transit fares, tuition, and property taxes because of Christie's dangerous and short-sighted cuts. How can the state justify subsidies to big corporations at a time like this?

That's why, in the spirit of shared sacrifice, Better Choices for New Jersey is calling for a one year suspension of BEIP. It's just one proposal in a multi-tiered revenue plan that could bring in $3 billion in critically needed funds. Our common sense proposals include restoring last year's rate increase on people making over $400,000 per year, increasing the surcharge on the corporate business tax that's set to expire, closing corporate loopholes that allow businesses like Goldman Sachs to avoid paying taxes to New Jersey, and bringing gas revenue in line with surrounding states. More on our proposals here.

This year we're taking our campaign around the state: to our colleges and universities, our social service providers; and even to Goldman Tower to fight for a budget of real shared sacrifice that asks the rich and corporations to pay their fair share.

You can help be a part of the fight and send Chris Christie a message by joining us on May 22nd in Trenton. Sign up here for the rally.

Thousands of people - teachers, students, nurses, transit riders, and working families from every part of the state - are asking for a balanced approach to dealing with this financial crisis that doesn't increase property tax for working families while cutting taxes for the rich and corporations.

Together, we can let Trenton know that there are better choices for our state.

Crossposted on Blue Jersey: http://www.bluejersey.com/diary/15264/just-say-no-to-goldman-sachs-giveaways