10 July 2009

Business Tax (Dis)Incentives

"Giving a tax incentive to a business to encourage economic development sounds like a great idea, but it is not. Tax breaks for businesses are little more than corporate welfare at the expense of hard-working Georgians. They amount to subsidies favoring a select few businesses over Georgia’s residents and existing businesses.

Proponents of tax breaks for new businesses argue the increase in jobs will make up for the reduction in revenue, but tax breaks for businesses rarely pay for themselves and often end up costing the state a great deal of money. That shortfall must be paid for by Georgia’s taxpaying citizens and business, which don’t have the benefit of that break.

Giving a business a tax incentive to move here may help that business in the short term, but in the long term the people who pay for that tax break also happen to be the employees and the customers of that company. Plus, it sends the wrong message to existing Georgia businesses: “If you stay in the state, we will use your tax dollars to subsidize your competitors.”

In June, after the North Carolina Legislature approved a $46 million tax break designed to induce Apple, Inc. to build data warehouses in the Tar Heel State, Scott Hodge, president of the Washington, D.C.-based Tax Foundation, had this response: “Too many legislators confuse targeted business incentives with policies that truly create a better business climate.”

“They are not. They only provide an excuse for lawmakers to avoid real tax reform. Targeted incentives are to a state’s economy what steroids are to the human body – short-term results that eventually weaken the bones, cause heart failure, or worse, impotency. Tax systems should not be used to pick winners and losers or micromanage the economy. Data farms in North Carolina might be a good thing, but it is much better for the marketplace to decide that, not government. The key to a prosperous economy is a tax system that provides a level playing field for all businesses and all industries...”

...The most equitable tax incentive that Georgia could offer would be to cut taxes on individuals as well as corporations to make Georgia more attractive to individuals and businesses – both old and new. This would lead to investment and job creation, encourage more businesses to move to Georgia and send the correct message to Georgia’s current businesses." (Emphasis Mine.)

No, I ain't moved to Georgia. I just used this article to answer this question: Guess what "economic strategy" Puerto Rico has surgically grafted (heavy emphasis on "graft") to its low sloping forehead of business development for 40+ years?


The Jenius Has Quoted.

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