For release Tuesday, June 12, 2007    

                                                        Contacts:          Jon Shure 609-393-1145                                                                      Bettina Damiani 212-721-7996       

                                                                      Dan Steinberg 212-721-4865

TAXPAYERS SUBSIDIZE

CITIGROUP’S MOVES

Report Questions Value of Tax Breaks for Global Firms

The world’s largest financial services firm rarely makes a move without getting taxpayers to help foot the bill, a new report suggests. Citigroup uses threats of moving facilities and jobs elsewhere to repeatedly play state against state and locality against locality and attract millions of dollars in subsidies. Over the past 18 years this practice has won Citigroup over $226 million from New York and New Jersey governments, sometimes for moving jobs from one state to the other.

Pay, or We (Might) Go: How Citigroup Plays the State and Cities concludes that global businesses like Citigroup are such risky bets for investing state and local economic development resources that public officials wanting to promote good jobs and stronger communities should rethink whether companies so large and so mobile should even be eligible for such breaks. The report is a joint effort of New Jersey Policy Perspective and Good Jobs New York aimed at informing the public and promoting debate about the use of business subsidies for economic development. The research led authors Sarah Stecker and Dan Steinberg to examine two other states, Kentucky and Texas. Citigroup received over $285 million from all four states over the period studied.

Among the findings:

● Citigroup sometimes sought special tax deals even though it wasn’t pledging to create new jobs.

● Despite company claims that subsidies were critical to determining where the company ultimately decided to expand or relocate, business basics—a skilled work force, affordable housing, good transportation and a modern telecommunications system—mattered far more.

● Large, company-specific tax breaks won’t guarantee Citigroup will stay or that it will avoid layoffs. The latest proof came in April when the firm announced it will eliminate 17,000 positions worldwide, including over 2,700 in the four states.

● Citigroup at times appears to have taken advantage of the unwritten code of silence among states to suggest competition when no rival offers actually were made.

● Citigroup’s claim to “need” tax breaks is undermined by its willingness during the period studied to spend lavishly on global acquisitions, baseball stadium naming rights and executive compensation.

“Citigroup’s subsidy antics in New York City are the tip of the iceberg,” said Good Jobs New York Director Bettina Damiani. “Officials on both sides of the Hudson River need to wise up to the fact that the game is rigged and team up to set a national standard for regional cooperation in economic development.”

“The losers in this multi-state arms race are taxpayers,” said NJPP President Jon Shure. “The money is better spent on schools, transportation and other economic development that will still be here when fickle companies leave for the next great deal.”

If companies like Citigroup do get subsidies, the report recommends that:

● In an age of accelerating globalization and capital mobility, states and cities should hold multi-facility companies to higher standards about job creation and reduce the duration of tax breaks so companies can be reasonably expected to pay some taxes and share the public-sector costs created by their arrival.

● When State A is told that a company is considering relocating to State B, the states should actively communicate with each other, with a goal of minimizing dislocation for current employees. Today, an unwritten code forbids states from even verifying the truthfulness of company representations about each other.

● States, in granting a subsidy to a company with multiple worksites in the state, should protect themselves by setting job creation and job retention requirements that apply to the company’s entire statewide employment level.

● Considering how much is at stake, New York and New Jersey should be leaders in advocating for a national solution to the economic war among the states. In the short term, the two states—and localities within them—should work toward broader cooperation to make the region more attractive instead of spending tax dollars to poach companies from one another.

NEW JERSEY POLICY PERSPECTIVE 137 W. Hanover St. ● Trenton, NJ 08618 ● www.njpp.org

GOOD JOBS NEW YORK 11 Park Place, #701 ● New York, NY 10007 ● www.goodjobsny.org