NY Times Op-Ed: Government Shouldn’t Give Big Tax Breaks To Attract Companies

NY Times Op-Ed: Government Shouldn’t Give Big Tax Breaks To Attract Companies

The NY Times has give former Delaware governor Jack Markell (Democrat), who served from 2009-2017, a platform to bash government giveaways to corporations, which is very interesting, considering what the NY Times itself received for their building

Let’s Stop Government Giveaways to Corporations

Amazon recently sent state and city officials across the country scrambling to respond to its announcement that it was seekingenticements to build a second headquarters, promising 50,000 new jobs and $5 billion in investment to the winning location. Governments are mobilizing to devise lucrative incentive packages. I know how this works, because I spent eight years supporting these types of incentives as the governor of Delaware.

Amazon’s public encouragement of a bidding war highlights a competition that state and local governments engage in every day. I became very familiar with this process: A big business promises thousands, hundreds or even dozens of jobs and waits for offers from mayors and governors eager to demonstrate to voters that they are bringing them jobs. In Delaware, our economic development office, with my full approval, was busy calculating direct subsidies to corporations through grants and tax breaks.

I was as guilty as any elected official at playing this game. But it’s a game that should stop. There’s a better way to compete for business.

Mr. Markell then spends a bit of time discussing the types of tax breaks, incentives, fee reductions, etc, that Amazon is asking for, and states are offering, and how this is pretty darned normal as states compete for businesses. He “doesn’t blame Amazon” and “doesn’t blame public officials” for playing this game, but, he just doesn’t like it, darn it all! It Offends him.

The result is a market failure in which neither side is motivated to fix the problem. State and local policy makers can’t unilaterally opt out without potentially negative consequences for their constituents, while businesses have a fiduciary obligation to pursue these short-term direct incentives. Competition for jobs should not be seen to hinge on which government can write the biggest check to an employer but on the kinds of things that officials in Delaware and other states spend so much time on to make their communities places worth living in: the quality of schools, work force development programs, the transportation grid and other infrastructure, and the overall quality of life.

I bet when Mr. Markell goes to buy a vehicle he demands they give it to him for their “lowest price”, then demands more. Car sales people would certainly prefer to see the vehicles at sticker, so they can make money, rather than cutting their prices to compete with the other dealers who are trying to undercut them. Same in tons of sales industries. If you can go to one supermarket and get your favorite tea mix for $4.85, and another for $3.85, where are you going?

What does Markell want?

The solution is straightforward: Congress should institute a federal tax of 100 percent on every dollar a business receives in state or local incentives that are directed specifically to that company. This would not include investments in public infrastructure, work force development or other investments that can attract employers while also providing a significant long-term benefit to taxpayers.

This tax would, however, end payouts that go directly to a company’s bottom line and would eliminate the pressure these companies are under to pursue such enticements. I’m talking about incentives like direct grants to a company in exchange for the creation of a specific number of jobs (something we did in Delaware while I was governor) or free or reduced land or the passage of a tax policy tailored specifically to one company.

Good luck making that happen, and, of course, the Democrat fallback position is always to tax tax tax. But, here’s an interesting thing

However, I do not need to lecture The New York Times on that topic because it knows that lesson well. After all, the newspaper of record has its headquarters in a building built on land seized by the government under the power of eminent domain from ten different owners, some of whom did not want to sell, implying that the government exercise of power saved the developer money. In addition to that benefit, The New York Times also received $26 million in tax breaks in exchange for keeping jobs in New York City.

In fact, the NY Times itself reported that they received $29 million in tax breaks and other incentives, and tap-danced around the reality that they got the land and building for below market value rates thanks to Government. And the Times was super-thrilled that the city used eminent domain to take the land from the previous owners, which is certainly a perk, right?

It’s interesting that the Times allows Democrat Markell to write an op-ed blasting the exact same thing that the NY Times took advantage of, is it not? Perhaps Mr. Markell should demand that the NY Times pay his 100% tax.

Crossed at Pirate’s Cove. Follow me on Twitter @WilliamTeach.

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