Thursday, January 06, 2005

Tax Bribes Aren't a Road to Healthy Economic Growth

State Senator Jay c (R-21) is sponsoring a bill which would prevent municipalities from giving businesses tax rebates as an emergency measure. It's a baby step, admittedly, but it is a step in the right direction. Emergency adoption avoids public hearing and discussion of such measures and makes public comment irrelevant. Other bills have sought to stem the tide of tax bribes (estimated at over 420 million over the last two years in the Phoenix area alone), but have failed to pass the legislature, or in some cases, failed to even get out of committee.

Business lobbyists are quick to claim that the revenue lost to such 'incentives' is quickly recouped through new tax reciepts and defrayed infrastructural costs. Like spending money on junk food with little or no nutritional value instead of good healthy food, such deals may seem like a bargain now, but in the long term they sap the vitality of the communities who gorge on the highly processed sugar and starches that are tax bribes.

If a company is only locating in your community because of tax incentives, and pulls their profits out of your community, all the while placing often unfair and subsidized competitive pressure on local businesses, your community becomes a hostage to non-local businesses with no roots, no loyalty, and no investment in the community. The community is at the whims of the business cycle and decisions taken far away. This is why towns and cities with strong local economies are more recession-proof than those which have been colonized by chains, franchises, and multi-national corporate facilities. The tax base shrinks as local business withers. The expatriated profits of those opportunistic business interests, which demand tax bribes to locate, leave the town with 70% less reinvestment per dollar of profit compared to local business. The municipality can easily find itself on a slippery slope in economic hard times, struggling to keep up vital services while hostage to the increasing demands of mercenary businesses demanding ever-greater tax bribes in the name of their 'profitability'.

Reform of this practice of using tax bribes to pump up artifical growth is sorely needed in Arizona, but even though the GOP claims they want less interference in the market by government, they are held hostage by business interests who have become addicted to the empty calories available at the public trough. I commend Mr. Tibshraeny for filing the bill. I wish more politicians would demonstrate leadership on this practice of tax bribery, which neither party supports, but neither can seem to definitively denounce and promise to stamp out.

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