Posted on 01/05/2017 10:58:09 AM PST by MichCapCon
Dan Gilbert, a developer and owner of many private companies in Detroit, has been urging the Michigan House of Representatives to approve Senate-passed bills that would give some developers and business owners more taxpayer-funded subsidies.
Gilbert defended his position in the Detroit Free Press:
He noted that some critics oppose the incentives for ideological reasons, or say the government shouldn't try to pick winners and losers.
“That all to me is legitimate and I get that,” Gilbert said, “but there’s a lot more to this than, ‘Hey, rich guys are getting this and neighborhoods are not getting anything.’” That characterization he finds unfair, saying it ignores what he believes is his “mission” to help the city grow.
The city “functions as one organism that has to work together, and to me it’s driven by jobs,” Gilbert said. Neighborhood residents “benefit from the overall healthy city that will have more taxes to drive more services and to drive better education,” he said. “I’m going to just keep pounding on this stuff because it’s just so massive and critical.”
No ideology is required to oppose this: there are solid practical reasons why giving taxpayer dollars to business owners and developers is ineffective and is a waste of money. As a previous article here about the proposal explained, “The record shows they are much better at creating press releases about jobs than actual jobs. They also invite corruption, and they don’t justify their costs.”
Gilbert is Detroit’s biggest cheerleader and has put his money where his mouth is when it comes creating wealth and employment in the city. But business subsidies are not a good idea in principle or in practice.
I don’t have a huge problem with business tax abatements, but they need to be smart.
When I lived in Mt. Clemens, I once had a City Council candidate come to my door. I asked him about a tax abatement they had given to a large employer in town.
The company was an auto supplier, depression hit and they asked for a 15 year abatement. Of course, the Step’n Fetchit’s in the Council gave them their abatement.
I asked why they didn’t do it in five year increments and he hemmed and hawed. He didn’t get my vote.
“Business Subsidies”
Another way of saying taxes and regulations are too high in the first place.
I always vote against tax breaks for some special group. The budget doesn’t change so the taxes for everyone else go up. If government realizes that taxes are bad for one group, then they are bad for all groups. Giving one group a break creates a perpetual special interest in maintaining their special status. The one thing that is never considered is whether all the budget items the taxes paid for are even within the charter of the government to do. Eliminate those things that shouldn’t even be there and perhaps you can give an across-the-board tax break. (I’ve never seen that.)
I disagree with perks for businesses. They know the market and have done the research so they already know they will make a profit moving to whatever city. Mr. and Mrs. Taxpayer shouldn’t be on the hook to make up for someone else’s taxes or utilities or whatever enticement. The odds are, the business isn’t going to benefit the average taxpayer one bit.
I think there’s a reason why Politician A wants a sexy company to come into town and is willing to give them a break, but not Joe’s Plumbing who would benefit much more from it. It’s new. He can claim credit for bringing it onboard and, possibly he worked a side deal; his wife gets a consulting contract or it buys land he owns an interest in. Little Joe’s Plumbing? Booorrrring...
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