New York Times: Stop States Racing to the Bottom for Firms
|June 6, 2014||Posted by Staff under Good Press|
This 2014 excerpt of the New York Times, May 9, is by Edward Alden and Rebecca Strauss of the Council on Foreign Relations.
Each year, state and local governments in the United States spend more than $80 billion, or roughly 7 percent of their total budgets, on tax breaks and subsidies to attract investments from auto companies, movie producers, aircraft makers, and other industries.
State governments would be better off if they collectively ended the handouts and competed for business in other ways, such as making investments in infrastructure or education or offering lower overall tax rates.
The World Trade Organization has rules that restrict government subsidies. The Organization for Economic Cooperation and Development has a longstanding arrangement to limit financing subsidies to exporters. These international models should be adapted to our states. Kansas and Missouri are trying to reach a truce to stop bribing businesses to move from one side of the Kansas City area to the other.
Ed. Notes: It’s not just when state politicians compete that opening loopholes is bad; it’s always bad. Either everybody pays or nobody pays; fair is fair. If any state or locality or nation wants to be a haven for business — as are Singapore or Hong Kong — all it has to do is geonomize — as did Singapore and Hong Kong. That is, cut taxes on people’s efforts — even eliminate them. Instead, recover the rental value of land. Land is something that a new business moving in has to pay for anyway, so if the local government gets the payment, it’s only sellers and lenders who’d lose, and the value of land is not theirs anyway.
The value of land is created by the presence of community while land itself is created by nobody. Ground rent makes the perfect common wealth. It’s our earnings and purchases and buildings — private wealth — that should never be taxed.
And if we did not tax what we should not in the first place, we’d have no excuse to open loopholes for favored insiders.