July 23, 2012 by wiliamthennessy
Here’s Why Tax Credits Kill Society
Tax credits reward particular businesses or developers with tax dollars from the general population. They concentrate wealth in a few hands. Tax credits are the way politicians play the market with someone else’s money.
Worse, Republicans are addicted to tax credits.
A Missouri House Republican leader told a constituent that his party gives tax dollars to people who “spend it smarter.” Bill Clinton said the same thing in about 1992. That means, in the past 20 years, conservative Republicans have come to adopt the Democrat party’s position on redistribution of wealth.
Republicans dominate Missouri’s legislature. In 2011 and 2012, Republicans led efforts to transfer your tax dollars to the hands of private companies and developers. Grassroots groups around the state rallied to stop them. Several brave State Senators became heroes of fiscal responsibility by defying their party’s leaders and wealthy developers to thwart corporate welfare schemes.
What supporters of development and historical tax credits fail to grasp is the bad effect the practice has on society. This effect contributes to our dying economy–an economy that’s put more people into poverty than any time since the Johnson administration.
Here’s how it works. A developer convinces legislators that his idea will help the region, but short-sighted private investors refuse to put their own money at risk to back the venture. Playing on legislators’ natural egos, the developer essentially cons them into investing our tax dollars. The result is a gamble with public money–a gamble that loses nine times out of ten, according The Mackinac Center for Public Policy.
To increase the chances of success, legislators tend to tip the playing field toward the tax credit recipient. In Missouri last year, legislators tried to give China Hub developers an unfair advantage over other warehouses with legislative language so narrow as to apply only to their favored developer, shutting out owners of 18 million square feet of unused warehouse space.
When these gambles fail, communities suffer. Disadvantaged competitors close shop and move. City and county planners build infrastructure and increase services in anticipation of jobs and commerce from tax credit financed developments. But 92 percent of the time, the projects fail, leaving communities and businesses holding the bag. Meanwhile, the private developers walk away and state taxpayers pay the bills.
As you prepare for the August 7 primary in Missouri, look at the people who’ve stood against corporate welfare at the cost of party and corporate support. It’s easy for politicians to say “no” to governors from the other party. It’s real statesmanship when legislators buck the party line to do what’s right for the people and the rule of law.