Bananas for Charlotte, or Charlotte Just Bananas?
City of Charlotte to small entrepreneur:
“Your business privilege tax is due immediately.”
City of Charlotte to billion-dollar mega-corp:
“Here’s millions of dollars from our citizens and existing businesses. We know we have an unfavorable tax climate, but we like *you* so we’ll help you out. The rest of the local riff raff can just keep suffering.”
While obviously a bit flippant, that is essentially what took place in Charlotte last week with the announcement of Chiquita agreeing to move to the Queen City after being granted (bribed?) roughly $22 million by the city and state.
Folks, this is a bipartisan epic fail.
The issue here is that big business is learning that it can milk taxpayers across the nation by playing games like this. They have discovered the ability to hold local citizenry hostage by compelling government officials into choosing special privileges for some at the expense of others.
The result is free market capitalism being replaced by an unholy alliance of business and government interests each seeking to take advantage of the other.
Big corporations are able to win the discounted costs and false competitiveness that incentives allow. Congruently, elected officials are able to signal to voters that they are “working hard” to grow the economy and increase jobs as illustrated by the announcement of the acquisition of some new company.
Unfortunately, some officials that would otherwise be against such special interest kowtowing too often believe the simplistic argument of incentive requesters that “you are either for the jobs we will bring or against them”. They view the incentive game as a necessary evil. To snub them in the name of ideological purity would put one at an economic disadvantage to the other localities that will continue to offer them.
It’s all about competitiveness.
Now certainly cities and states should be competing for business development, but the proper way to do so is by lowering the tax rates for all, lessoning the regulatory burden for all, and creating a climate that Chiquita (or any other company) would want to come to without the need for a special “incentive”. Create an environment where everyone can thrive, not simply the chosen few.
After all, as Frederic Bastiat noted, “Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone”.
Indeed, while the incentive package may provide some tangible benefit, often lost is the opportunity cost of the incentive money being left in the economy to begin with. The grants didn’t just magically materialize. The money was extracted from the economy in the form of taxes on existing citizens and businesses. Who’s to say that the money, if left where it started, wouldn’t have an even greater impact on the economic climate?
It very well may, it just doesn’t come with a photo op.
Instead, a handful of elected officials at the behest of a company looking to benefit have declared that they know what’s best for any given dollar. This was never the intended role of government. Politicians may sincerely believe that their efforts are providing a community benefit, but since the alternative can never be studied, it’s a bit of a hollow victory. The numerous possibilities of unseen benefits are exchanged for one particular result…a result that should be deeply insulting to the people paying for it.
Elected officials need to grow a spine and stand up to this type of extortion and realize that if lower costs and taxes are good for “the big boys” then they should be good for the existing businesses and taxpayers as well. Leave the community’s resources in the hands of the community to begin with and stop trying to play some non-virtual version of Sim City with other peoples money. This is real life, not a game.
Thankfully, the City Council still needs to officially vote on allowing these incentives for Chiquita to move forward. They will do so at their December 12, 2011 meeting. Will the new council being sworn in on December 5th take a different direction? If enough voters speak up, anything is possible. Do your part.
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