Charles Koch has been outspoken on the subject of subsidies and crony capitalism. In his 2014 Wall Street Journal op-ed, he wrote:
Far from trying to rig the system, I have spent decades opposing cronyism and all political favors, including mandates, subsidies and protective tariffs—even when we benefit from them.
As a point of fact, investigative reporter Lee Fang reported that Charles Koch founded an energy lobbying outfit called the Institute for Energy Research, which “aggressively opposes any effort to repeal tax breaks afforded to the oil and gas industry.” Furthermore, Koch’s insinuation that he is a passive beneficiary of existing policies is also misleading. Shortly before Koch’s op-ed was published, it was revealed that Koch Nitrogen was receiving subsidies as part of its expansion of a facility in Enid, Oklahoma. When Koch Industries was called out for this hypocrisy by a Kansas newspaper, a spokesman told the interviewer:
“We play by the rules and where the government incentives are already in place, then our businesses are going to participate.”
Less widely reported, however, was the active role that Koch Nitrogen played in asking for and obtaining these subsidies:
Koch Nitrogen will go before the Garfield County Commission Tuesday to seek support for its plans to invest $1 billion to upgrade and expand the Koch plant and fertilizer processing facility east of Enid.
Koch will ask commissioners to create a TIF review committee, the first step in securing a financial incentive for the plant expansion.
According to Good Jobs First, Koch Industries and its subsidiaries have received over $195 million in state and local subsidies. Koch’s hypocrisy also extends to tax policy. He is well known for advocating for lower taxes, and has gone to great lengths to minimize his own tax liability. The Center for Public Integrity reported on “Luxembourg tax deals for Disney, Koch brothers empires revealed” while, back in Kansas, Koch proxies supported a zero tax rate on pass-through LLCs that helps Koch minimize its state tax liability. In the words of the Kansas Health Institute:
Wichita-based Koch Industries, which has a number of large LLCs as subsidiaries, including Georgia-Pacific, could use the law to exempt many of its income-producing holdings.
Koch is one of the world’s largest conglomerates with annual revenue of about $100 billion, according to Forbes. Owners Charles and David Koch helped launch Americans for Prosperity, the anti-tax group that has been a major donor to conservative Republican candidates, including Brownback and dozens of Kansas legislators. The brothers’ support for conservative politicians is well-known.
The fact that the law also could benefit the state’s largest business is a sensitive point for Brownback officials and one they do not willingly raise.
When Kansas faced the inevitable budget shortfalls from the new tax policy, Governor Brownback did NOT oppose a budget that contained painful tax increases, but only on the condition that it left the LLC loophole intact:
The House passed the largest tax increase in Kansas history in the dark hours of Friday morning — clawing past tears and fatigue to endorse a measure to fill the state’s budget hole after the governor warned of imminent fiscal calamity.
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Republicans had been divided in recent days into several factions. One of the major points of contention among the unofficial caucuses were over whether to make changes to tax breaks for business owners. The exemptions, which shield owners from having the pay income tax on nonwage income, have been fiercely defended by Brownback.
Through his subordinates, Brownback had issued a public veto threat that he will veto legislation that raises business taxes.
Governor Brownback claimed that “Koch Industries has no undue influence in Kansas politics”, and therefore the blame for raising taxes on their neighbors, to pay for its own tax break, cannot be laid at the feet of Charles Koch and Koch Industries. However, there is at least one direct example of a Charles Koch-backed group lobbying for higher taxes on others, as a way to protect its own interests—specifically taxes on solar energy. According to the New York Times:
the Kochs and other big polluters have been spending heavily to fight incentives for renewable energy, which have been adopted by most states. They particularly dislike state laws that allow homeowners with solar panels to sell power they don’t need back to electric utilities. So they’ve been pushing legislatures to impose a surtax on this increasingly popular practice, hoping to make installing solar panels on houses less attractive.
In short, Charles Koch’s businesses actively solicit subsidies, and a protectionist non-profit he founded actively seeks to maintain oil and gas subsidies. Meanwhile, Koch-funded AFP lobbies against renewable energy subsidies. Also, Charles Koch supported state business tax cuts that benefit him and opposes higher taxes, unless they are taxes on competing technologies.
As one former Kansas State Senator said:
"Koch Industries is Just a Terrible, Terrible Citizen"
And Charles Koch is a “crony capitalist.”