Nearly $700 million a year in state income taxes withheld from worker paychecks in 16 states is being used to provide subsidies to corporations rather than paying for public services. These diversions have gone to more than 2,700 companies, including major firms such as Sears and Goldman Sachs. Few affected workers are aware, because no state requires they be informed on their pay stubs.

These are the findings of Paying Taxes to the Boss: How a Growing Number of States Subsidize Companies with the Withholding Taxes of Workers, a study published today by Good Jobs First, a non-profit research center in Washington, DC.

"Diversion of personal income tax revenues into subsidies violates how economic development has been defined," said Good Jobs First Executive Director Greg LeRoy.

Paying Taxes to the Boss examines 22 subsidy programs derived from personal income taxes (PIT) that together cost about$684 million a year. "These programs are justified in the name of job creation, but they often end up subsidizing companies to move existing jobs from one state to another. Or they go to employers that threaten to move unless they get paid to stay put," said Philip Mattera, research director of Good Jobs First and principal author of the report.

"We recommend that states seriously consider abolishing PIT-based subsidies. Short of that, we urge Truth in Taxation: that companies be required to disclose the details of how much money is going where on pay stubs of affected workers," LeRoy added.

The programs:

Colorado: Job Growth Incentive Tax Credit
Connecticut: Job Creation Tax Credit
Georgia: Job Tax Credits
Georgia: Research and Development Tax Credit
Illinois: EDGE Tax Credit
Indiana: EDGE Tax Credit
Kansas: Promoting Employment Across Kansas
Kentucky: Kentucky Business Investment
Kentucky: Kentucky Industrial Revitalization Act
Maine: Employment TIF
Maine: Shipbuilding Facility Credit
Mississippi: Withholding Rebate Programs
Mississippi: Mississippi Advantage Jobs
Missouri: Automotive Manufacturing Jobs Act 
Missouri: Quality Jobs Program
New Jersey: Business Employment Incentive Program
New Mexico: High Wage Jobs Tax Credit
North Carolina: Job Development Investment Grants
Ohio: Job Creation Tax Credit
Ohio: Job Retention Tax Credit
South Carolina: Job Development Credits
Utah: Economic Development TIF

The share of withholding taxes diverted can be as high as 100 percent and the duration up to 25 years.