I have never been a fan of corporate welfare programs. Here in North Carolina, we have seen our share of them. Dell, Google, and other industries have been lured to the state with multi million dollar incentive packages at taxpayer expense. Here in Johnston County, we have seen our share, as well.Now we are seeing a push for more of the same. The Smithfield Herald has an article on the recent plan for local town to offer tax rebates to encourage business development. First, if we just plain lowered taxes across the board, business would be encouraged. The high tax rates we already pay are a disincentive for development. Government regulation adds to the high costs of doing business, as well. Here in Selma, we already have an increased property tax rate (businesses pay a lower tax rate than residential owners like myself, so I am told) plus sales tax, income tax, FICA, and federal taxes. If all that burden were lessened, we would not have such a hard time with getting businesses started and continuing. Present businesses would have more to invest in their companies and ordinary people may be able to start their own businesses.
Chris Johnson, I know you read my blog. I respect you, but I am not real keen on your plan. Perhaps you can convince me over a cup of coffee at Riverside some day. I understand the concept and the reasons behind the tax rebates. However, I think that the five year plan is a bit of over kill and akin to the deals that Dell and others have gotten.
If I add a sun room to my house, which I have been contemplating, by the way, along with other improvements, I don't get a five year moratorium or rebate on my increased property taxes. If I add a $20,000 room to my home, I will have to pay taxes on that $20K. Fair is fair. Taxes should be even handed across the board. I realize that after five years, a business will have their normal tax rate and MAY (not a definite, since businesses come and go) pay full freight then.
According to the article:
Here’s how Johnson’s plan would work: If a doctor turned a $50,000 building into a $1 million office, he would pay property taxes on that $1 million valuation. But at the end of the year, he would get a rebate equal to the tax differences between the $1 million and $50,000 valuations. The rebates would continue for five years.
This last town council meeting was one of the few that I missed in the last two years. I think I have missed just two or three regular meetings, and those from having worked late. I wish I was there for a few items of interest.
On Tuesday, Johnson got his first backers. Town Council members in Selma listened intently and later approved the rebate program pending a public hearing to be held next month.
In Selma, the incentive program would be tweaked a bit. Property owners along a stretch of East Anderson Street from Webb Street eastward to the town limits would be eligible only if they planned new construction.
The town hopes to see new banks, hotels, restaurants and retail stores spring up along the road. Farmer praised Johnson for his work in developing the overall plan and thanked him for his help in adjusting it to meet his community’s needs.
“I naturally thought it was a pretty creative idea,” Farmer said on Tuesday. “That’s why I jumped on board.”
I will certainly try to be at the public hearing. At least the plan is less objectionable for Selma, in that it is only for a specific area and for new construction. Personally, I can't see it happening along that roadway. It is right down the street from where I live and I go that way often to I-95. That area isn't exactly ripe for development of banks, hotels, restaurants, and retail, in my opinion.
Like I said, I have never been a fan of business incentives and corporate welfare. It often does not pay off and ends up being unfair for the average tax payer with little return benefit. Thousands of businesses have come along with no incentives except the free market system and done just fine. If we have the atmosphere conducive to a particular type of business or just in general, then we will attract businesses. I am not so sure that this is the way to do that.
Here in Selma, I don't see exit 98 into downtown (whoops...uptown) as prime development property or an incentive package to manipulate businesses into developing that area as a panacea.
3 comments:
Troy…thanks for your voice in community and here on the internet.
I agree with you…welfare is welfare…whether it is personal or corporate. We both agree that business is better served if government is out of the way and let the free market dictate the survival of the fittest.
However, the cost of doing business is growing like kudzu. Whether it is electrical rates, trash pickup, or flushing the toilet, the rate government charges for these services is greater than what they charge residents. I tell people that it would be similar to a person going to purchase a gallon of gas at Larry Stancil’s gas station. Individuals pay $2.16 a gallon, but then Larry would charge a business $2.75 for the same gallon of gas. Now, government won’t allow Larry to do that…and if he tried, he would probably be sued, fined by the government, thrown in jail, or all of the above. However, it baffles me to think why we allow government to charge business a different rate for the same product they provide.
Anyway, I am getting way off base for the real purpose for this post, so thank for allowing me to respond to the Incentive Proposal idea. You have correctly describe the concept of the incentive in your blog…I still will invite you to join me at Riverside anytime to discuss this topic, as well as other conservative principles. Banter is always good.
No matter what analogy you choose to use…the genie is out of the bottle, or the train has left the station, incentives are here and it is highly unlikely it is going away anytime soon. The purpose of my idea is to address what you stated in your article, “That area isn't exactly ripe for development of banks, hotels, restaurants, and retail, in my opinion.”
If this area isn’t ripe for development, and doesn’t look like it will be any time in the near future, why not give a “small business owner” or “local citizens” a reason to consider a blighted area in town as a possible investment?
The towns and Johnston County are already doing this for industry, (Sysco, Talecris, Andrews, etc.) why not give the same opportunity to local citizens? With my proposal, neither government agency will “lose” money. With the development of a blank piece of land, they will still be able reap the benefits of electrical sales, water sales, etc, as well as improve the look of the area. Neighboring property will also increase in value.
Government is always been involved in the development business…USDA Loans, NC Rural Center Loans, NCDOT building roads, County running water and sewer lines, etc. The taxpayers fund all of these projects. The good thing about my idea is that the business or developer is getting back “their” tax dollars… not someone else’s.
Again, thank you for your comments and look forward to that cup of coffee at Riverside.
Chris Johnson
Chris,
It took less time than I thought for you to find my commentary. Thanks for the reply.
I agree with most everything you wrote. I find it insane that the government charges more for businesses in some regards than others. They do pay higher utility rates, the phone and cable companies charge more for service for business customers, and there are always other methods of dinging the small business man...and large business, for that matter.
I was not a fan of the Sysco incentive package, any more than I am in favor of any such incentives package. I will admit that your plan is more fair than others I have seen and it is less objectionable to my sensibilities than most. It is, none the less, another taxpayer funded package.
The area targeted in Selma is not ripe for development primarily because of what is there. Exit 98 is one of the worst exits for access and egress on the interstate. No business development will solve that challenge to development. It is not right off Highway 70, a major throughway like at exit 97. That is a second issue. There is a major railroad crossing there and a train station.
A restaurant or bank would just be "out of the way" from the already settled area and would not really conform to either the surrounding area or usage thereof. That is why I believe that the stretch in question is certainly not ripe for development. It really has less to do with encouragment of the building there and more to do with the uselessness of the terrain because of proximity to the railroad, lack of interstate access, and distance from the center of town. I believe that the reality is that no incentives would really make that area attractive to development.
I agree that "the genie is out of the bottle", as you stated in your analogy, in reference to the implementation of corporate welfare packages. The real question is simply two fold. One, do we stop that by doing more of the same? And two, is it really fair to everyone else? Idealogically, I would say no to both.
To take another analogy, the US Congress passes many laws that are beyond their scope of enumerated powers according to the US Constitution. Do we rectify this by passing more laws or by stopping their erroneous ways? Do we ride that bandwagon and milk it for more or do we do what is right at even the smallest level and stop it?
If there is a big time drug cartel operating in the area, do we encourage the small time dealer to go ahead and make his small amount of cash by comparison so he can pay his bills and spend money that will bring in sales tax revenue? Or do we bust him just like we should the cartel head? Or the single street hooker versus the brothel ranch owner? I realize that these are illegal activities compared to unfortunately legal ones, but wrong is wrong either way.
Also unfortunate is the reality that such incentives are probably here to stay. Either way, my vote on the council would be "no".
You brought up USDA loans for sewer and water improvements. Like you, I see this as using other people's money for our benefit. When this is multiplied thousands of times across the nation, this really hurts, not to mention it is unconstitutional. The most heinous part of that sort of deal is that we pay taxes on the money to lend, then turn around and pay taxes on the money to repay the loan amount. That is just plain irresponsible government on both ends, and my vote would again be "no".
Anyway, Chris, I want to thank you again for taking the time to respond. You are always welcome to reply. I welcome differences of opinion and firmly believe that we can civily discuss issues without being at odds, as we have done here. I appreciate your candor and your honesty thus far and hope to see more of it in the future.
By the way, I have an idea I want to discuss with you sometime soon. Let's hook up and talk.
Shoot me an email when you can about your idea you would like to discuss.
dsdcchris@aol.com
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