Pennsylvania government favors big business

Small businesses worry about the power of larger corporations in the marketplace, but they’re also unhappy with the subsidies and tax breaks big businesses get from the government.

A survey of independent small businesses published by the Institute for Local Self-Reliance showed that small businesses perceive a business climate that favors bigger companies. A majority of respondents were retailers, and businesses had an average size of 15 employees.

Survey respondents suggested a handful of policy changes they’d like to see:

  • Ending subsidies and tax breaks for big businesses.
  • Breaking up and/or regulating Amazon.
  • Investing in downtowns and neighborhood business districts.
  • Strengthening antitrust policy and enforcement.
  • Capping credit card swipe fees.

The market power of Amazon was a recurring hangup, with 62% of respondents calling it a significant challenge to their business. The ability of large competitors to get better access, pricing, and terms was another challenge, according to 65% of respondents. Another 58% complained of large competitors selling at a loss, the cost of health insurance (56%), and shortages and supply chain challenges (53%).

One silver lining may be that, at least for retailers, government regulations and red tape weren’t a significant challenge: only 22% of respondents mentioned it, and only 22% mentioned securing loans or financing as a problem.

The effects of COVID-19 on the supply chain, which meant that companies with bigger market shares could get priority over small businesses seeking supplies and projects, may have amplified complaints.

Pennsylvania in particular has been open to granting Amazon subsidies. The Commonwealth Foundation has called Pennsylvania “the nation’s leader in corporate welfare.” It hasn’t been a small sum: “Since 2007, Pennsylvania has led the nation in corporate welfare spending at nearly $6 billion,” the foundation noted in a report.

According to Good Jobs First, which tracks tax breaks and subsidies given by state and federal governments, Amazon has received $25 million in tax breaks and subsidies from Pennsylvania since 2008. Often, those subsidies are announced by the governor with a press release touting the number of jobs associated with a project.

The subsidies could have been much higher. When Amazon was deciding where to build its second headquarters, Gov. Tom Wolf offered the company $4.6 billion in incentives to locate in the state.

The “special subsidies doled out to select businesses” create “an economic system favoring the privileged few at the expense of everyone else,” according to the Commonwealth Foundation.

This article was originally posted on Pennsylvania government favors big business

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