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.

0 thoughts on “Here’s Why Tax Credits Kill Society

  1. Okay – so who are the politicians who have NOT participated in corporate welfare in the state? What are the current canidates viewpoint on this issue (for the STL and St. Charles area)? I would much rather vote for someone who will not take my hard earned tax dollar and “give” it friviously away in these types of schemes.

  2. Well I am a Conservative and a small business owner and no one has ever offered me a tax credit or a freebie of any kind. I am happy to report.

  3. […] with taxpayer funding to encourage economic development. Pragmatically, tax credits sound great. In practice, they destroy economies and communities while failing to return the promised benefit for…. Tax credits boil the blood of small government people like me. Loyalty to my principles means […]