We keep hearing the news of tax breaks being issued by state law makers to give incentive to locate a business in that state. Even for company’s who have not even asked for it. I know in my local area but not my state, a Governor not only gave a 3 billion dollar tax break over 25 years but a promise for the taxpayers to do a EPA clean up of the property they want to use.
The fact is, a industrial company will locate where the infrastructure is in place to support it’s long term use. Some may play the multi-location game to get tax breaks but in the end, it’s the transportation infrastructure and location to end users and suppliers of products that matters.
All of this really becomes a question of who losses.
Most of the time it’s the local taxpayer. Why ?
He/She will have increase in costs to provide water, sewer and street upgrades to probably a already strained system. And will not get enough in tax collection from any increase of jobs to pay for it.
Just think of all the strains that a local Wall-Mart may have put on your local community if they gave them tax breaks to locate. And while you gave them the tax break, they destroyed the ma and pa biz that paid the bulk of the local taxes. So you now have less jobs, less taxes and strained infrastructure to cover for and you have to pay for that tax break now! Cost shifting at it’s finest.
It use to be a plus when a new industrial plant would go up as they would pay for the infrastructure they needed and everyone benefited by that fact. It increased the tax base for all and made the individual share of the tax burden smaller. Not anymore !
What would be a fair use of tax breaks?
A Proper Tax Break might be one of the following for good reasons:
We need additional refining capacity for fuels like gasoline/diesel. The refiners are not going to do it themselves because when supply is as tight as it is, they make more profits. So lets provide a 5 year tax free break to any company who will build a new, environmentally sound refinery till capacity has grown by 5% in the country .
We want and need manufacturing jobs so why not provide a 5 year tax free break to anyone who will build a factory to make a product that is currently not being produced in this country. Allow up to 50 per year, one per state per year.
You get the idea but it must be done in partnership with the states and watched carefully so it is not a detriment to local taxpayer or miss-used and have a reasonable time expiration date. I think 5 years of no federal tax is good enough but see 8 years possibly for a more expensive operation to something we really need. States could and should partner in step with the federal government for needed things.
To give a tax break to anyone who is only using it to become a bigger version of itself or provides a unfair advantage against a competing company, only harms the locality and the state not to mention the nation. I don’t even think a stock holder benefits because of the Wall Street money shell games. Why anyone would give a tax break to a retailer defies logic.
Time to promote “Build A Better Mouse Trap” and not a Too Big To Fail Company while supplying the country with what it needs. Proper use of Tax Breaks is the tool.