A great new post over at Bacon’s Rebellion looking at the problem of tax abatements and tax incentives for the purposes of local economic development. Randy Salzman wraps the issue of tax abatements around the required rise in property values required to cover the losses realized in tax abatements. This, in turn, directly affects the funding of school systems, roads and highways, parks and recreation facilities, etc., etc.
chamber of commerce, city governance, corporate welfare, Corporatism, county governance, DaimlerChrysler Corp v Cuno, economic development, infrastructure budgets, job growth, Kelo v City of New London, property taxes, quality-of-life measurements, school budgets, state governance, Supreme Court decisions, tax abatements, tax incentives, taxpayer lawsuits
At the New York Times, Louise Story can, from time to time, crank out a devastating investigating piece on some aspect of our economy, and Saturday’s edition was no exception. “As Companies Seek Tax Deals, Governments Pay High Price,” Story investigates the high price being paid by local governments for providing tax abatements to companies, damn the long-term costs.
Here in my home state of Indiana, the story resonates. Local officials will provide tax abatements of such extended periods to small- to mid-cap companies with shaky financials, only to find the abatement period outlasts the company. For large companies, local officials will acts like dogs, trying to outdo the dog in the next county in their barking contests, and placing school budgets and property-tax rates at risk. In all cases, abatements are often provided in return for present and future job growth, only the job growth promised rarely materializes and, to add to the pathetic, neither local nor state officials hold the corporate recipients of the tax abatements responsible. If the promised job growth does not materialize, the rescission of the tax abatement should follow. Continue reading