Guest column: Pointless gifts to business
Give'em tax breaks,
Make their day;
But in time,
They'll move away.
The former speaker of our state House of Representatives loved movies. Aside from credible entertainment, he saw them as an economic engine. Soon the state government was lending money and doling out tax breaks for filming. And lo, the moviemakers came. Now you'll find our state listed at the end of many credits.
Glamour came too, and local papers and TV fawned over the shooting of all those scenes. There's nothing like celebrity to perk up the press. But did the state make any money off its investment? Worse luck, it doesn't seem so. The new tax revenue from increased business looks to be less than what we spent. Oh well, at least we had a ball. Yes, the recession-induced budget deficit now appears poised to end all that fun.
But the underlying question remains. How wise is it for a state to offer financial incentives to attract juicy employers, when all other states and many cities are doing the same thing? We win one; they win one. It sounds an awful lot like a zero sum game.
Take my town. We just collared the headquarters of an international knife maker. That's good for 30-40 new jobs.
New jobs for us, that is. But many of those jobs were lost to Briarcliff, which presumably was not thrilled. What sealed the deal was a state loan at 3.5 percent for $750,000. Sounds like a cheap price to pay for a good employer, but is that the way tax money should be spent, picking winners and losers among towns?
A few years ago we hooked a much bigger fish, a liquor company, this time with the promise of state tax credits. No question they've been a fine citizen. Liquor companies need to be. But what would have happened if there were no credits. Would Diageo have closed down? Would it have limped back to England in a huff? No, it would have settled in the town best suited to it in the first place with no tax money expended. Maybe here, maybe someplace else.
Naturally companies also move out of town, for much the same reasons. Easy come, easy go. But the move-outs don't get quite the same publicity as the move-ins, and there's no chance for the losing pols to crow about their benefaction to the city.
"Sorry, those tax dollars were for somebody else."
But most states are still at it, spending away. A couple weeks ago the governor announced big subsidized loans to three more manufacturers, whether they needed the help or not. This while the state faces a multi-billion dollar deficit, as do all states.
So why, one might ask, pay out anything at all. Either a federal law or an interstate compact should prohibit these boondoggles. Businesses can perfectly well figure out which towns are best for them. There's no value to society in using tax revenue to compete among localities. And which official is it who gets to pick winners and losers? If ever there were a setting for corruption, that's it.
Left to their own devices towns could well discover the competitive value of good schools, parks, affordable housing, health care, and the other services that appeal to business and citizens alike. How novel if cities competed for industry on the basis of the availability of apartments.
The heavens would quiver.
Columnist William A. Collins is a former state representative and a former mayor of Norwalk, Conn.