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Tuesday, May 28, 2013

"Libertarian" Koch Brothers Have Taken Tens of Millions in Subsidies UPDATED

The Cato Institute, originally the Charles Koch Foundation, is one of the most influential libertarian think tanks in the country. With both Charles and David Koch on its board of directors, Cato has produced numerous studies on the evils of corporate subsidies (which it calls "corporate welfare"), dating back at least to the 1990s. Supposedly, Charles Koch himself (via Wikipedia) is opposed to "corporate welfare," and plans to oppose it this year.

I guess I'll believe it when I see it. As previously discussed in Dirt Diggers Digest, Koch Industries has received many subsidies over the years, and I doubt this leopard will change its spots. In fact, the full tally of giveaways they have received extends far beyond the article linked above.

The calculation below relies on Good Jobs First's Subsidy Tracker database and the New York Times subsidy award database (not the program database). While 98% of the entries in the Times database come from Good Jobs First, reporter Louise Story took the first big step toward aggregating by standardizing company names. However, this still does not connect parent and subsidiary companies, so I carried out this step for the Kochs by using the Wikipedia entry for Koch Industries. With a quarter of a million entries and counting in Subsidy Tracker, I cannot imagine how long this would take if I had to do it for every company.

Here are the subsidies I was able to identify for Koch companies.

Flagship Koch Industries has taken over $16.5 million in subsidies from 11 different awards, none of which are sales tax breaks (which generally are not subsidies).

Subsidiary Georgia Pacific has received 72 subsidies worth over $43.9 million (none of these were sales tax breaks).

Subsidiary Flint Hills Resources LP has received subsidies from Iowa, Kansas, Texas, and Michigan, according to the Good Jobs First Subsidy Tracker; the New York Times subsidy database, which omits Michigan but includes one more Iowa subsidy, puts the value of the Iowa and Kansas subsidies alone at just over $12.5 million (again, none of which were sales tax breaks).

Subsidiary INVISTA has received $217,504 in training grants from South Carolina, according to Subsidy Tracker. Several other subsidies appear to be connected to this subsidiary, but none have available subsidy amounts. Again, none were sales tax breaks.

To summarize:

Koch Industries: $16.5 million
Georgia Pacific: $43.9 million
Flint Hills: $12.5 million
INVISTA: $0.2 million

Total subsidies to the Koch brothers:$73.1 million

Remember, this is the minimum value of the Koch brothers' subsidies. Some of the entries had no dollar figures available, and there is always the possibility that some incentives were missed entirely or that the awards above were only a part of a subsidy package, not the entire value. In particular, local subsidies are not well covered in either database; the same is true for my national estimates. The  data just isn't widely available.

Meanwhile, Koch Industries is going to be the largest investor in the Big River Steel project in Osceola, Arkansas, which is expected to cost the state $132 million in incentives.

Like I said, when it comes to the Kochs fighting subsidies, I'll believe it when I see it.

UPDATE: Yasha Levine tweeted me to let me know about two stories he did at Exiled Online in 2010 and 2011. While I focus above on state and local subsidies, Levine's stories focus on federal and foreign subsidies received by Koch companies. The biggest takeaway is that the federal subsidies, especially the ethanol subsidy, dwarf what the Kochs have received at the state and local level, with the ethanol subsidy alone worth perhaps $1 billion a year. The mind boggles.

Check out Levine's stories for the gory details. Thanks, Yasha!

Cross-posted at Angry Bear.


  1. The Koch brothers are billionaires who take government subsidies from taxes which they discourage through Tea Party proxies who will see their Medicare and Social Security jeopardized by lower tax rates. The blatant willingness of the Koch brothers to achieve their means through hypocrisy is indisputable. They represent the billionaire class that is contributing to inequality through their manipulation of our political system. How can this even be stopped when money can purchase power so directly through lobbyists and marketing campaigns as clever as Tea Party Patriotism?

  2. That still does not excuse the hypocracy by Koch in saying that he rejects corporate welfare yet his company recieves it.

  3. As long as they pay MORE in taxes than they get back in subsidies, they are NOT receiving anything from government!

    They are still NET TAX PAYERS and by a very, very, very wide margin! At the very most, one could qualify this as a slight reduction in their tax load.

    I'm 100% Anarcho-Capitalist, but as long as government takes money from me, I see no wrong in getting that money back in whatever form, to the extent that I do not lobby for taxation in the first place!

    The problem are all those people who ACTIVELY SUPPORT TAXATION in order to get some of that tax money into their own pockets.

    Once one has been taxed, it is legitimate to get back that stolen money, as long as one does nothing to cause or increase taxation.

    1. This is incoherent. One measures subsidies against baseline taxation, and by that standard the Kochs have received many millions in subsidies. Seriously, end of story. It's the standard treatment out of international trade policy and embodied in World Trade Organization rules.

      Taxation is not theft; it's the price we pay for living in a civilized society with roads and police and schools, all of which provide benefit to the Kochs.

    2. Thank you. I would have nonsensical, but incoherent works.

  4. "who will see their Medicare and Social Security jeopardized by lower tax rates"

    For starters, there is nothing legitimate about taking Medicare and Social Security payments. Whoever supports such socialist government redistribution of stolen money is encouraging CRIME.

    As for the Koch brothers, you are not guilty of taking it as long as you did not support the creation or continuation of the system and you are a net payer, over your lifetime.

    If you are a net taker, then you've joined the ranks of the parasites and lose the right to have an opinion. Only those who pay may say what their earnings should be used for.

    Apart from that, your logic is completely flawed: you presume that there's a fixed amount of money that is required to pay for whatever you think government should do and that this amount corresponds to a specific taxation rate.

    That's complete nonsense: Government will take whatever it can and spend 90% of it totally wastefully, in ways that are going to cause more harm than good.

    When government income increases, e.g. through higher tax rates, this NEVER leads to a fulfilment of whatever pipedreams people have about the positive effects of government action.

    On the contrary: more income only has ONE effect - the creation of MORE DEPENDENTS in the form of more government employees, more subsidies and more welfare etc.

    Prof.Curzon-Price from University of Geneva did a study in which she compared the 23 Swiss cantons and their various tax rates. (NB: I'm Swiss, so I know this intimately well).

    The top rates vary from 18% in canton Schwyz to 38% in Geneva for the same income (including an 11% top federal tax).

    Geneva is the world private banking center and has a huge number of international headquarters, along with numerous international institutions. They practically swim in money.

    Yet they are on the far left, they even elected a communist mayor in Geneva, city, hence the high tax rates.

    Schwyz is a small canton that is for the most part in the middle of the Alps.

    Which one is doing better?


  5. There is no hypocrisy in accepting corporate welfare while at the same time arguing that government shouldn't give it out to anyone. A person can play a board game while arguing that the game would have a better outcome if the rules were different. If giving out free money is part of the game, you play by the rules.

    1. Leading a country and people is not a game.