Corporate Welfare, Alive and Well
As a developer of shopping malls, including 22 in California, Westfield Group clearly takes its responsibilities to the consumer economy seriously.
The Australian company’s malls are typically well-designed and anchored by the finest department stores, such as Bloomingdale’s and Nordstrom. The firm spends gobs of money to refurbish its older malls.
As a California taxpayer, you should be proud of Westfield’s efforts. That’s because you’re paying through the nose for them.
Over the years the company has reaped hundreds of millions of dollars in favorable tax assessments, as a recent study documents. That means millions in foregone revenue that could pay for schools and parks.
And this summer, the Los Angeles City Council granted Westfield a special tax break of up to $59 million on a new mall in Woodland Hills it probably would have built anyway.
Westfield’s position is that it receives nothing it’s not legally entitled to. “Westfield has paid all real property taxes that have been assessed in accordance with applicable law, like every other taxpayer,” its spokeswoman, Katy Dickey, told me by email. As for the new tax abatement, “we worked with the city through the review/approval process and followed the rules,” she said.
Yes, they probably did — and that’s the problem.
Westfield is a perfect example of what’s wrong with California’s system of business incentives. Corporate welfare has been baked into the rules for so long that state and municipal leaders don’t think twice about it anymore. No one asks whether these breaks serve their purpose. No one asks for evidence of a compelling need.
