THE BLOG
09/04/2014 10:25 am ET Updated Nov 04, 2014

It's OK for the Rich to Get Richer If the Money Comes from Government

Rampant hypocrisy: it's why many Americans are repulsed by politics.

People are turned off by the "do as I say, not as I do" style of politician.

But this kind of politician is everywhere, and so is their rhetoric.

A prime example exists in Illinois, emerging as candidates gear up for the 2014 gubernatorial election. The logic is as follows:

  1. It's OK for politicians to hand out tax dollars to the rich
  2. It's wrong for the rich to find ways to pay lower taxes

Giving the rich tax breaks and free cash is nothing new - but politicians have done an incredible job of calling it something else: "job creation."

Illinois Gov. Pat Quinn just gave a $2 billion company a $15 million tax incentive. But he and his team tried to pass it off as "creating 500 new jobs" over the next five years.

"Creating new jobs" sounds great, especially in a state that still has to earn back 170,000 jobs before it fully recovers from the Great Recession.

But this growth is superficial. Illinois isn't gaining 500 jobs because of the state's economic merits - among other pitfalls, Illinois has the fourth-highest corporate income tax rate in the U.S. and high startup fees for new businesses. To mask the negative effects of the state's toxic business climate, politicians had to resort to sweetening the deal using handouts.

The sad thing is, politicians give big businesses money all the time - especially in Illinois.

The state gives giants such as CME Group, Sears and Motorola millions of dollars in tax breaks each year ($77 million annually to CME Group, $15 million annually to Sears and $10 million annually to Motorola).

But that's OK, because it means politicians are "creating jobs."

Corporate subsidies and tax breaks show government understands that businesses respond to incentives and make decisions based on a bottom line.

Somehow, the logic doesn't follow when individuals want to keep as much of their money as possible.

Case in point is Gov. Quinn's absolute demonization of gubernatorial opponent Bruce Rauner for tax avoidance.

Full tax information for Rauner won't be available until three weeks before the election, but Rauner is a successful businessman with a net worth close to $1 billion.

Quinn's campaign has released ads attacking Rauner for utilizing legal tax loopholes to reduce his tax bill - which was still a whopping $10.1 million in federal taxes and $2.6 million in state taxes in 2012.

The federal government is guilty of the same brand of crony hypocrisy.

Burger King has drawn ire from Washington as the fast-food giant engages in talks to buy Canada-based Tim Horton's (a former U.S. company that moved north in 2009), opening up the possibility that the American chain would relocate its headquarters to Ontario.

Such a move would mean a drop in the company's corporate tax bill. At 35 percent, the U.S. has the highest corporate tax rate in the industrialized world. Canada's rate is 15 percent.

At the same time that many politicians are criticizing Burger King for corporate inversion (a perfectly legal practice), the U.S. government is handing out billions of dollars to big agriculture.

According to Business Insider:

Congress and the Department of Agriculture are spending more than $1.28 billion annually to subsidize the crops that are used as additives in manufacturing cookies, candies, soda pop and other highly popular junk food.

So, following the U.S. government's logic, it's OK for government to give big ag billions of taxpayer dollars to subsidize crops that supply fast-food chains; but it's not OK for fast-food companies to cut their tax bills by relocating to a friendlier business climate.

Burger King and Illinois offer excellent examples of the type of political hypocrisy that drives people crazy. It's incredible that politicians still act shocked and appalled when people and businesses respond to incentives. It's even more incredible that their actions reflect the opposite.