John Oliver talks taxes and economic incentives on Last Week Tonight

On Last Week Tonight, host John Oliver makes economic development and tax incentives interesting and worthy of your attention. Seriously.

The latest episode of Last Week Tonight concerns economic development and job incentives, which — hey, don’t turn the channel! Yes, John Oliver sees that you’re watching the Entourage movie, but anyone with half a soul will turn back, oh, right about now. See? Things could be much worse.

Besides, jobs and the economy are pretty serious things that require your attention. For instance, “politicians care about jobs more than anything else,” according to Oliver. Don’t believe it? Just witness how much they mention “jobs”, from stump speeches to cable TV to the Senate floor. It’s as if it’s a Beetlejuice-style incantation that will magically summon all the jobs we need if only some brave Senator says it about a million times in a row.

Here’s the clip. (Warning: It contains some NSFW language, as is the usual M.O. of Last Week Tonight.)

Specifically, Oliver and the Last Week Tonight team want to concentrate on one supposed source of jobs — economic incentives. These include tax breaks, like START-UP NY’s zero taxes on practically anything. In fact, all 50 states offer incentives like tax breaks. Ostensibly, this will attract employers, increase jobs, and promote spending.

“If a company’s big enough,” said Oliver, “it can even start a bidding war”. That’s happening right now, as Amazon decides where to build its second headquarters. Cities across the country are jumping at the chance to host the mega-company. Amazon has even produced an eight-page request for proposals for interested municipalities.

A few cities have done some frankly weird stuff, like NYC lighting up in “Amazon orange”. Birmingham, Alabama just plopped down huge Amazon boxes everywhere. Stonecrest, Georgia even offered to create a new town called “Amazon”.

Tax incentives

What Amazon really cares about, however, are tax breaks. Many cities have been tight-lipped about their exact offers, but some information has come out. New Jersey offered up to $7 billion in tax breaks. Now, how could other places compete with this? How would they be able to fund municipal things like fire departments, public works, and schools?

As it turns out, incentives are seriously big money. In 2015, tax incentives cost up to $45 billion dollars — and for what? For one particularly interesting and, for some, bonkers example, Oliver turned to Kentucky’s Ark Encounter.

The Ark Encounter spent $100 million ($18 million of which benefited from Kentucky tax breaks). Is this a good use of what is effectively lost public funds? Sure, there’s a page on the Ark Encounter website that asks some very important questions (namely, “What About All the Manure?”), but this all seems like a very free interpretation of the already loose separation of church and state.

Okay, the Ark Encounter created some number of jobs. However, the Human Resources department there has been allegedly very discriminatory. Reportedly, all employees must sign a “statement of faith” that necessarily excludes non-Christians and LGBTQ people. Single people working for the Ark Encounter must also sign a chastity pledge.

“Come on,” said Oliver. “They weren’t brought [into the Ark] two by two so that everyone could have a swim buddy.”

Why would local officials gamble on the Ark Encounter? The hope of future returns, essentially. People expected it would make nearby Williamstown, KY something of a boomtown. Yet, locals have said that it’s resulted in nothing.

Loose rules

Overall, it seems as if many incentive programs have very lax requirements and little monitoring. For example, START-UP NY worked under a requirement that each startup had to create a minimum of one job a year. That was apparently too much for some, as the state considered scaling it back to one new job every five years. Or take Fargo, North Dakota’s tax break for FedEx. But did they really need to do this? FedEx had already stated that it would move to Fargo without the incentives.

By the way, do all of these incentives lead to permanent jobs? Film and TV incentives, for example, are generally flexible and impermanent. If a production doesn’t like the incentives in one area, they could potentially pack up and move to one of the 29 other states that have film industry incentive programs.

Research into the effects of incentives has been lacking, too. Who is supposed to worry about these programs? And what are states or officials supposed to do when the data they find is less than encouraging?

Louisiana found that it only earned 22 cents for every dollar it spent on film incentives. That’s not as bad as Maryland, which made only 10 cents for every dollar. Connecticut’s program got seven cents to the dollar.

There’s not a good way to measure how else these programs could help local economies, such as through increased visibility or heavier foot traffic. Even the most basic information can be difficult to pin down, said Oliver. That should be a big deal when states and municipalities are gambling with millions of dollars in potential tax revenues. Few of these state program actually have reports that include things like numbers of jobs created or solid revenue numbers.

How to make it better

“It is pretty clear that economic development needs to be done in a much smarter way,” stated Oliver. But where does the responsibility lie? It’s hard to blame companies because that’s capitalism. If you run a company, wouldn’t you naturally want to locate somewhere that makes the best financial sense for your venture?

Rather, Oliver places the blame on governments. There needs to be more oversight and better measuring. Oh, and Entourage got a $5.8 million credit from California, even though it’s impossible to conceive of an Entourage movie filmed anywhere else. If nothing else persuades you, let this needless waste of money make an impression.

And if this all bummed you out, keep watching for a fascinating segment on The Inspectors. It’s a federally-funded CBS show that follows U.S. Postal Service Inspectors, and it is so charmingly strange and earnest that you may actually want to wake up Saturday mornings to watch it. One episode involved a cyber-ransom case via an envelope with guacamole stains. Yes, that happened on the show. As a result, the postal inspectors arrested people against a taco truck.

Next: John Oliver talks about floods, insurance and hungry seagulls

Characters give rousing speeches about the importance of mail delivery while inspiring music plays in the background. Alas, however, the main audience for the show is 55 and up. But how will this help the USPS get the word out about the importance of the agency?

According to Oliver, “what they need to do is insert their message into existing popular shows”. Of course, Last Week Tonight is here to help, thanks to some friends in high places. It’s enough to make you believe that, despite all the funky tax shenanigans going on, there are still good things out there.