The Big Tax Breaks Behind Big Chicken
PLUS: New details about Apple's app store lobbying blitz.
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The Guardian published a good piece recently by Nina Lakhani, who looked at the power Tyson — which is one of the largest meat processors in the world and the largest chicken processor in the U.S. — has over local communities, businesses, and workers.
“When a company like Tyson can get so big and powerful, where they have a near monopoly and monopsony in their industry, they make their own rules and rake in profits, while everyone else suffers,” said the economist Rebecca Boehm, who is quoted in the piece and authored a report looking at Tyson’s power in Arkansas, where it’s headquartered. Tyson is so large and has monopolized so many local markets that it can unilaterally dictate prices to farmers, wages for workers, and influence local politicians who allow it to dump waste wherever it wants and generally treat everyone under its purview extremely shabbily.
A lot of poor choices have gone into the policy stew that allowed Tyson to amass so much power, from lax antitrust scrutiny to absurd agricultural workplace regulations and more. The New York Times’ Binyamin Appelbaum recently wrote a piece about how the Biden administration should spend some time figuring out how to break up “Big Chicken.”
But the corporation was also undeniably helped along by the insistence of state and local governments on gifting it tax breaks that it poured into undermining competitors and lobbying for new rounds of lax rules.
Overall, Tyson has received more than $250 million in disclosed state and local subsidies, dating back to the late 1980s; it’s received many undisclosed subsidies too, so the total amount is actually much higher than that.
That’s a lot in the aggregate, of course, but individual instances better reveal how Tyson dupes pliant politicians into giving it funds it doesn’t need, which it uses to consolidate its power.
Here, for instance, is a Washington Post report from 1992 about how Tyson received $7.8 million in tax breaks over two years from Arkansas, where Bill Clinton was then governor. One $900,000 grant (plus an undisclosed amount of tax credits) was, according to state officials, the dealbreaker that made Tyson open a new plant in Pine Bluff, Arkansas.
However, according to a Tyson executive, that wasn’t actually the case: “It was based purely on geography … Pine Bluff was in the right place. The tax credits didn't make any difference."
“Didn’t make any difference” is obviously the key phrase. As with so many tax incentives, then, a massive company was given taxpayer dollars to do what it was going to do anyway.
But Tyson’s shenanigans certainly didn’t end there. In 2018, it received $674,000 from Iowa for plant upgrades that it freely admitted would create no jobs. The next year, it received tax credits from Center, Texas, for opening a new feed mill, even though its presence in that town was already so large that it employed literally one-third of the population — making it an obvious spot for a new facility, incentives or not. That feed mill is also located in a federal Opportunity Zone, so we all paid a little bit for it.
The pattern is obvious: Take local funds to entrench its economic and political power, making everyone from local politicians to local workers to farmers dependent on Tyson’s benevolence, or lack thereof.
Why does this happen? Well, there are a few forces at work facilitating these deals, beyond too many lawmakers buying into the big myth that corporations need public money to do anything in a particular community.
As I alluded to earlier, a whole lot of bad choices have led to extreme consolidation in the agricultural sector. There are only a few corporations controlling everything — in meat processing, it’s pretty much three: Tyson, JBS, and Smithfield — so lawmakers who want to look like they are doing something to help bolster the food chain inevitably end up doing favors for one of those massive players, even if they mean to help local farm or factory workers.
That same dynamic has allowed processors to form company towns, which gives them significant power to extract subsidies from communities. Much like Boeing, Disney, or many others, when a particular place becomes too dependent on a single employer, that employer can demand concessions and lawmakers pay up out of fear of losing the only economic engine they have.
My former colleagues Zoe Willingham and Olugbenga Ajilore have a good piece on what that looks like in the meat processing industry here, and Tyson is surely no different: Local lawmakers whose greatest fear is Tyson leaving town, even if that threat is negligible to non-existent, cave to its demands. That’s what it looks like happened in the Iowa and Texas examples above.
In the end, all subsidizing these giants does is reinforce the status quo, making it more likely that these giants come back to demand more later, while small farmers, agriculture workers, taxpayers, and ultimately you as an eater of food are left worse off.
ONE MORE THING: Politico’s Emily Birnbaum wrote a good piece last week on how Apple (and Google, a little) worked to defeat bills in several states that would have regulated how big tech corporations treat developers that sell apps in their respective app stores. (I wrote about those bills a lot: See here, here, here, and here.)
One of the tactics Apple reportedly used was to threaten to cancel economic development projects in a state that adopted new app store rules:
When Georgia legislators introduced a pair of app store bills in early February, Apple immediately hired five new lobbyists to advocate against the legislation in the state. And during the frenzied debate following the bill’s introduction, Apple lobbyists told legislators that the company could pull out of two important economic development projects in Georgia — a $25 million investment in a historically Black college in Atlanta and a potential multibillion-dollar partnership with Kia to build autonomous vehicles in the city of West Point — if the legislation went through, according to two people familiar with the conversations.
Pretty gross, but not unlike how Apple generally treats the communities in which it does business. Read all of Birnbaum’s piece for the gory details. I’ll be working on this issue a lot more in the future, too, so give a shout if you want to get involved in your state and I’ll let you know how.
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— Pat Garofalo