Koch Industries Still Rides the Tax Subsidy Gravy Train

While Charles Koch talks a good game about opposing special-interest handouts and corporate welfare—and is actually opposed to tax subsidies that benefit the middle class—his multinational conglomerate squeezes out every tax break it can for its various operations.

Koch Industries consistently ranks as one of the top two largest privately owned companies in the U.S., placing just behind the commodity trading company Cargill, with $120 billion in revenues last year. But that didn’t stop it from reaping the benefits of more than $38 million in local and state tax rebates, tax reductions, and grants in 2021 and 2022, in addition to a number of enterprise zone subsidies and tax abatements for which amounts were not disclosed. 

And that’s on top of billions in federal tax subsidies Koch Industries gets as part of the fossil fuel industry, plus more than $1 billion per year in savings from former President Trump’s massive tax cuts for corporations and the wealthy—tax cuts that Koch’s political operation spent $20 million to help pass. 

Oklahoma, Texas, Louisiana, and Oregon have all granted state and local subsidies that have benefitted Koch Industries. 

Approximately $29 million of these came from Oklahoma’s tax commission in the form of tax rebates and credits for a fertilizer plant in Enid. In Louisiana, Koch Methanol St. James, a joint venture with the Chinese company Yuhuang Chemical Industries, received a tax exemption worth $7.7 million for its facility in St. James Parish.

Koch Industries operates companies engaged in oil refining, pipelines, fertilizers, commodities trading, ranching and, through its Georgia-Pacific subsidiary, paper and wood products. As owner of 42% of the parent company, Charles Koch is worth $69 billion as of Jan. 13, according to Bloomberg Billionaires Index. Julia Flescher Koch, widow of former co-owner David Koch, now owns the exact same percentage, with the same value.

Good Jobs First reports that Koch and its subsidiaries have received almost $654 million in tax subsidies since 1990, not including the many tax breaks for undisclosed amounts or subsidies received by start-ups funded by Koch’s private equity arm, Koch Disruptive Technologies. 

As the Center for Media and Democracy (CMD) previously reported, in 2017 Georgia-Pacific asked for and received a $5.2-million tax abatement for a new facility from the city council in Talladega, Alabama. In 2022, the city ranked as one of the poorest in Alabama, with a median family income of $30,307 (roughly half the national average) and one in four of its residents living below the federal poverty line.

In 2019, CMD reported on a 15-year tax abatement of an undisclosed amount given to Koch by the Toledo, Oregon city council for investment in an existing plant there. The city had an unemployment rate higher than the national average, and almost one-quarter of its non-working adult households were living below the poverty level, making it—like Talladega—a good bet for a tax subsidy.

Koch Says One Thing, Does Another

As a self-proclaimed libertarian, Charles Koch rails against tax breaks—except when they benefit his companies. The Charles Koch Institute—now rebranded as Stand Together Fellowships— has taken the position that “when governments provide payments, loans, bailouts, or other benefits to favored businesses, they transfer wealth from taxpayers to politically powerful special interests.”

Although Charles Koch considers tax breaks and government subsidies to be “suicide” in the long run and has urged other wealthy business leaders to oppose them, he apparently has no qualms about accepting corporate welfare himself. 

“Koch Industries has consistently opposed and actively lobbied against all forms of corporate welfare, including those we currently benefit from,” a company spokesperson wrote in 2015. “With that said, we will not put ourselves and our employees at a competitive disadvantage in the current marketplace.”

Americans for Prosperity, Charles Koch’s astro-turf advocacy group, lobbies hard against corporate tax breaks for industries other than his own. Last year, it urged members of Congress to oppose the CHIPS Act, which President Biden signed into law in August. The bill provides $52.7 billion in federal incentives for the semiconductor industry to manufacture computer chips in the U.S.

In a press release opposing it, Americans for Prosperity wrote, “The CHIPS Act taxpayer subsidies are not just unfair corporate welfare—they are also unnecessary” because the industry is already investing heavily in domestic production. But that same argument applies equally to Koch’s own operations.

The new subsidies for the fertilizer plant in Enid are part of a $150-million investment that builds on an earlier investment of $1.3 billion for plant expansion and modernization improvements made between 2014 and 2017. There is no evidence that Koch would have made these huge investments without subsidies. 

Similarly, Koch Industries receives large subsidies for its oil and gas business due to the oil depletion allowance, which permits oil companies to depreciate their assets for tax purposes faster than any other businesses can. The conglomerate also benefits from the cheap royalty fees it pays when leasing federal land for drilling. It is unclear whether Koch would keep producing oil and gas without these special breaks.

Koch Industries benefits from ethanol subsidies as well, which cost the federal government an estimated $6 billion per year, according to the Center for Public Integrity. Flint Hills Resources, Koch’s refinery subsidiary, is one of the top five ethanol producers in the U.S., making 820 million gallons of it a year at seven plants in Iowa, Nebraska, and Georgia.

CMD also recently reported that even though Koch aggressively lobbied against President Biden’s Inflation Reduction Act (IRA), the company simultaneously invested in a major solar equipment and production company and bought another solar firm outright. These companies now benefit from IRA provisions that allow for 30% tax credits for investments in many solar technologies.