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Tuesday, August 28, 2007

"We Don't Believe in Handouts"

I've heard that line or an analogous sentiment from many of my Republican/Chamber of Commerce friends. Yet these same folks like to see government give handouts to big business in the form of tax breaks (thus shifting the tax burden to workers and homeowners). Oh, but those handouts translate into more business investment, more jobs, and economic growth that trickles down to everyone, right?

Maybe not, say an increasing number of state and local governments. According to economists Alan Peters and Peter Fisher, state and local governments give up $50 billion each year in handouts to private business and receive little long-term economic benefit in return [Dennis Cauchon, "Business Incentives Lose Luster for States," USA Today, 2007.08.21]. As noted here yesterday, Gateway took advantage of a special low-interest loan provided by the State of South Dakota and then abandoned our low-tax state for high-tax California. Mayor Mark Funkhouser of Kansas City, Missouri, sees rich guys developing their own sense of entitlement:

"There's an entitlement mentality about tax breaks today," Kansas City, Mo., Mayor Mark Funkhouser says. "Every developer thinks it's his right not to pay property taxes." Funkhouser was elected mayor in May after campaigning against tax breaks to developers, including one for a luxury condo development in an affluent part of his city.

Funkhouser and many other officials are recognizing what research has been finding for years: tax incentives don't deliver bang for the buck. They pad the profits of rich businesspeople and leave regular taxpayers holding the bag:

Funkhouser says tax breaks take money from services — such as police and schools — that make a local economy successful. "Tax breaks are like taking a painkiller to mask the underlying problem, which are quality-of-life issues," he says.

I said it yesterday, and I'll repeat it today: the best investment of our money is not in tax breaks for rich businesspeople who don't need help; it's in schools and services that provide a basic quality of life for everyone and create a truly healthy environment for all citizens and businesses

9 comments:

  1. There are companies that jump the border for incentives only to leave shortly thereafter, but I don't believe Gateway is in that category. Started in 1985, moved to North Sioux City in 1990 and still a strong employer in 2007, even though they moved corporate headquarters in 1998. Add up the Millions of payroll dollars and property taxes Gateway has paid since 1990 (17 years) and I believe South Dakota has been paid back many times. Gateway's demise was when Ted Waitte sold control of his dream. Dakota Dunes would not have happened without Gateway and even though many jobs have gone away, those jobs have been replaced by other firms and families. Gateway was a positive experience for South Dakota and remains a vibrant employer today.

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  2. There is so much revealed every time progressives (or should I say Kusinishites?)talk about tax breaks. To them by NOT taking money from businesses or people, the government is using up their resources on the wealthy who don't need it. To them it isn't about government taking, it's about government giving a handout! To them the burden is a fixed pie that morally can't come from anyone but the wicked wealthy who apparently don't deserve it.
    If business or rich people feel entitled to keep more of the money they earn, at least they have a right to keep it. The government has far less rights to it and it is government that maintains a belief of entitlement to anything they demand.
    I don't own a business but I think it would be a great thing to erase corporate taxes entirely. taxing business is just an example of society's selfishness and greed. Its always about making somebody else pay for our own benefit.

    If I decide not to mug you, I'm not giving you a handout. It doesn't matter if after not being mugged you still have the audacity to not contribute to the well-being of your family. You might have only knocked on my door because I promised not to mug you for as much as my neighbor said he would mug you for, but that doesn't make me less a criminal, or make your own wallet more of a handout.

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  3. You are right about education being a key to making Madison prosper, but not the public K-12 schools. It's the college. The problem after all is rural flight. I do not see how making elementary or high school top notch will accomplish much of anything for the community except allow those students to go to college and get better jobs....somewhere else. Pumping resources into a college to make it a beacon for people starting adult life could do a lot more. Making the college more attractive to students will draw a larger population of students encouraging new businesses to come to cater to that population which will make Madison a more attractive place to stay when they graduate. It will also be more incentive for businesses that need a young educated work force that a college provides. As far as I know DSU hasn't grown significantly in the last 20+ years.

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  4. "As far as I know DSU hasn't grown significantly in the last 20+ years."

    I don't know about the past 20 years, but I can tell you that the enrollment at DSU in 1996 was 1231. Enrollment figures for Fall 2006 were 2439. That's a 98% increase in the past 10 years. I'd call that significant.

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  5. Noam Chomsky coined the phrase "corporate welfare" in the early 1980's. It accurately describes the situation. I assume that Phaedrus is my old friend Phil. That big wheel just keeps on turnin'.

    Anyway, if my aunt had a beard she'd be my uncle is my response to the "I decided not to rob you" argument. It simply does not follow. Corporate interests have, throughout the history of the US, reaped benefits exponentially out of proportion of any public good they provide. Corporations are without souls or conscience, legally bound to maximize profits at all costs. It is up to those who hold the public trust to legislate in such a manner to keep these dogs of war to heel.

    It amazes me we have to keep re learning these lessons (revisit The Jungle). Robber Barrons will gild their fat asses all the way to another great depression if we will let them. Unchecked, unrestrained capitalism is pure evil, and I'm an athiest.

    PS: would the Kearin who responded to this post be of any relation to the sons of Denny? These men influenced my childhood greatly.

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  6. I only hope the influence was positive. And yes, Denny is my uncle. I'm a former graduate of Madison High School and a debate student of Cory's back in his teaching days.

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  7. Heh! well I'm very happy to be wrong. I attended DSU for a year back in 96 so I've missed all of that growth since I moved away.
    Reese, a good way to lose any argument in my head is to refer the linguistics professor and self-proclaimed expert of....things not linguistic. My arguement was an ethical one. It doesn't matter if the public did provide corporations more than they give in return. The reputation and worthiness of the victim does not validate the assault. Corporate America can be an absolute horrible social citizen(although they can also be very good, in spite of never getting credit for it) But them sucking doesn't make it right for others to attack them repeatedly. Individual people can be crappy citizens too, but that wouldn't make it right for me to walk into their house and take down their credit card numbers!

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  8. Funny how tough conservatives can still co-opt the language of victimization when it suits their purposes. Taxes are not theft or assault; they are the fair price of citizenship. Taxes are what corporations pay (well, not in South Dakota yet) for the state's efforts to create a literate workforce, passable roads, legal protections of contractual rights, etc., that make corporations and the free market possible. Not even the toughest libertarian is an island in society (especially those of us beenfiting from this lively discourse on the Internet, a wonderful medium created by the government).

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  9. And I believe in the purpose of government and I believe in the necessity of taxes. However I recognize taxes for what they are and you don't seem to. You seem to think that because the money is collected for the good of a society that the nature of that effort is changed into something other than the taking of someone else's property. It is not the purpose to which the money is used that changes it, it is the manner it is taken. We fought for independence in part because of taxation without representation. The representation of the will and interests of those effected is how a society mitigates taxes from being outright theft into a collective effort. Having the progressive attitude that the money of others, whether it is an individual of a corporation, is by default owned by the government unbinds that contract of representative government and makes it thievery.

    I am happy to donate to the United Way every year....but it is still my money to give, not my obligation to provide, if they ever came demanding their funding I would forever after consider them morally bankrupt.

    One more thing Cory. The price of citizenship is whatever we make it cost. It is not a price tag left to society to figure out how to pay.

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