There’s been a lot of cheap conversation about tax breaks for businesses in the political discourse again this year. Over the years there’s been a lot more.
The truth is, there is a great deal of competition in attracting private sector businesses that pay family wage jobs, that don’t pollute the environment and stimulate the economy both locally and nationally because savvy elected officials understand how much successful private sector businesses contribute to the economy.
If all government officials took the approach the City of Seattle took in dealing with the Seattle Super Sonics basketball team and decided to NOT understand the needs of the business, NOT understand the competition for a franchise and worst of all, fail to understand the economic value a business like a pro basketball team brings to a community at large, where would we all be. The team didn’t get what they needed from the city so the owner sold the team to a guy from Oklahoma City whose local governments could justify the investments necessary to reap the benefits and the team was gone along with their revenue stream.
Now a guy wants to bring another team back to Seattle and the city is taking a different approach. If Christopher Hanson were to consider other cities as well he might get an even better deal.
Even professional basketball teams stimulate the economy to the tune of millions of dollars per year trickling down through the local economy to enhance tax revenues to the city, county and state.
Is an NBA franchise a business worth going after? What concessions are we willing to offer a business to locate in our community? Should government be in the business of attracting businesses?
This model applies to businesses up and down the economic spectrum, certainly more so for larger businesses.
When Boeing was contemplating their options regarding location of the 787 manufacturing facility, multiple states were thought to be in the running. Governors of states were in a pitched battle to land the plumb jobs and tax base at stake. How much booty would it take to get Boeing to locate in one state rather than another? In the end, Washington State got the nod, in spite of the fact that other states offered better packages, due in large part to the existing investment Boeing has in the state. Still Boeing squeezed the state for concessions and credits against their tax bills over a lengthy period of time.
This same process is at play every day when a business is negotiating with land owners for sites for business expansion. Uncomfortable regulatory restrictions, mitigation fees and various taxes are often on the table when a chance to land an A-list business is in the works with local, county and state elected officials.
In spite of the fact that Democrats characterize Republicans as the handmaidens of the business community every day, Senator Maria Cantwell is campaigning hard in a television ad championing the fact that she landed a tax relief package for a business in the state of Washington. Certainly when Senator Cantwell is campaigning she understands how the game is played. I’m not sure how she can forget that when she badmouths the tax benefits granted to other businesses calling them loopholes.
At the end of the day, each public entity must consider the benefits that come back to them when compared to the cost of procuring those benefits.
Growing the economy and creating private sector jobs are the big things in politics today. Well, this is what growing the economy looks like. It’s offering incentives to businesses to locate in a community or state with the expectation that those dollars will come back to the public through enhanced sales tax revenues, property tax revenues and appreciation to other businesses through the trickle down process. Statistics show that every job created by the Boeing Company spins off three other jobs so as the Boeing Company adjusts its payroll you can estimate the effects either up or down.
Democrats would have us believe that public sector jobs are the same as private sector jobs. In their minds work is work, but if there aren’t sales tax revenues or enhanced property tax revenues (which only come from private sector businesses) there isn’t revenue to pay the salaries of the public workers.
As much as we need public employees like teachers, cops and fire fighters, those public entities consume public resources and produce none of the revenue needed to pay for their services, so it’s vital that we have a healthy private sector to provide that revenue stream. If you burden the private sector too much, it withers and subsequently the revenue stream does as well.
Entrepreneurs take the risk to open a business with no guarantees based upon their estimation that there is a market for their product. Generally they invest their own money and maybe additional funds from their families and in some cases funds from outside investors in exchange for a piece of the business. The government doesn’t offer the local hardware store or restaurant, public funds to pay salaries and overhead until it turns a profit. (Well, generally they don’t.)
They secure a building and pay rent, they buy inventory or supplies, they hire and train their staff all on their own dime then they open their doors and hope their product or service appeals to the public enough that customers come through their doors, still on their own dime, then they pay their sales taxes, their B&O taxes, Unemployment taxes, their L&I Insurance and their payroll taxes before every taking a dollar home to support the family.
And Democrats want to demonize these guys if they aren’t enthusiastic about coughing up the more dough to pay for a boatload of benefits for their employees.
If I take all the risks, is it fair that I be vilified for making a profit? Where does the survival of the business fall in the priority of the public sector? (I once had an encounter with a government regulator who was clear that my survival wasn’t his concern.) If I work for less than my employees and re-invest the proceeds of the business back into the business for five years am I ever entitled to finally enjoy the fruits of my labor without criticism from the left as a filthy capitalist? How much profit is just enough, while another amount is too much?
Real jobs are created by private sector employers and our economy will never recover until there is an incentive for private sector investors to create those jobs.
If the jobs my business produces are good for the economy should the public offer me an incentive to locate in their jurisdiction?
The heart of the political struggle is the degree to which the public sector can even exist without a robust private sector. There is no doubt that the private sector can survive without big government. So what’s it going to be?
Posted on October 10, 2012 at 12:29 pm in Economic Development, Political commentary | RSS feed
|
Reply |
Trackback URL
No Loss for Words
Business & Government; Necessary Partners
by Steve DanaThere’s been a lot of cheap conversation about tax breaks for businesses in the political discourse again this year. Over the years there’s been a lot more.
The truth is, there is a great deal of competition in attracting private sector businesses that pay family wage jobs, that don’t pollute the environment and stimulate the economy both locally and nationally because savvy elected officials understand how much successful private sector businesses contribute to the economy.
If all government officials took the approach the City of Seattle took in dealing with the Seattle Super Sonics basketball team and decided to NOT understand the needs of the business, NOT understand the competition for a franchise and worst of all, fail to understand the economic value a business like a pro basketball team brings to a community at large, where would we all be. The team didn’t get what they needed from the city so the owner sold the team to a guy from Oklahoma City whose local governments could justify the investments necessary to reap the benefits and the team was gone along with their revenue stream.
Now a guy wants to bring another team back to Seattle and the city is taking a different approach. If Christopher Hanson were to consider other cities as well he might get an even better deal.
Even professional basketball teams stimulate the economy to the tune of millions of dollars per year trickling down through the local economy to enhance tax revenues to the city, county and state.
Is an NBA franchise a business worth going after? What concessions are we willing to offer a business to locate in our community? Should government be in the business of attracting businesses?
This model applies to businesses up and down the economic spectrum, certainly more so for larger businesses.
When Boeing was contemplating their options regarding location of the 787 manufacturing facility, multiple states were thought to be in the running. Governors of states were in a pitched battle to land the plumb jobs and tax base at stake. How much booty would it take to get Boeing to locate in one state rather than another? In the end, Washington State got the nod, in spite of the fact that other states offered better packages, due in large part to the existing investment Boeing has in the state. Still Boeing squeezed the state for concessions and credits against their tax bills over a lengthy period of time.
This same process is at play every day when a business is negotiating with land owners for sites for business expansion. Uncomfortable regulatory restrictions, mitigation fees and various taxes are often on the table when a chance to land an A-list business is in the works with local, county and state elected officials.
In spite of the fact that Democrats characterize Republicans as the handmaidens of the business community every day, Senator Maria Cantwell is campaigning hard in a television ad championing the fact that she landed a tax relief package for a business in the state of Washington. Certainly when Senator Cantwell is campaigning she understands how the game is played. I’m not sure how she can forget that when she badmouths the tax benefits granted to other businesses calling them loopholes.
At the end of the day, each public entity must consider the benefits that come back to them when compared to the cost of procuring those benefits.
Growing the economy and creating private sector jobs are the big things in politics today. Well, this is what growing the economy looks like. It’s offering incentives to businesses to locate in a community or state with the expectation that those dollars will come back to the public through enhanced sales tax revenues, property tax revenues and appreciation to other businesses through the trickle down process. Statistics show that every job created by the Boeing Company spins off three other jobs so as the Boeing Company adjusts its payroll you can estimate the effects either up or down.
Democrats would have us believe that public sector jobs are the same as private sector jobs. In their minds work is work, but if there aren’t sales tax revenues or enhanced property tax revenues (which only come from private sector businesses) there isn’t revenue to pay the salaries of the public workers.
As much as we need public employees like teachers, cops and fire fighters, those public entities consume public resources and produce none of the revenue needed to pay for their services, so it’s vital that we have a healthy private sector to provide that revenue stream. If you burden the private sector too much, it withers and subsequently the revenue stream does as well.
Entrepreneurs take the risk to open a business with no guarantees based upon their estimation that there is a market for their product. Generally they invest their own money and maybe additional funds from their families and in some cases funds from outside investors in exchange for a piece of the business. The government doesn’t offer the local hardware store or restaurant, public funds to pay salaries and overhead until it turns a profit. (Well, generally they don’t.)
They secure a building and pay rent, they buy inventory or supplies, they hire and train their staff all on their own dime then they open their doors and hope their product or service appeals to the public enough that customers come through their doors, still on their own dime, then they pay their sales taxes, their B&O taxes, Unemployment taxes, their L&I Insurance and their payroll taxes before every taking a dollar home to support the family.
And Democrats want to demonize these guys if they aren’t enthusiastic about coughing up the more dough to pay for a boatload of benefits for their employees.
If I take all the risks, is it fair that I be vilified for making a profit? Where does the survival of the business fall in the priority of the public sector? (I once had an encounter with a government regulator who was clear that my survival wasn’t his concern.) If I work for less than my employees and re-invest the proceeds of the business back into the business for five years am I ever entitled to finally enjoy the fruits of my labor without criticism from the left as a filthy capitalist? How much profit is just enough, while another amount is too much?
Real jobs are created by private sector employers and our economy will never recover until there is an incentive for private sector investors to create those jobs.
If the jobs my business produces are good for the economy should the public offer me an incentive to locate in their jurisdiction?
The heart of the political struggle is the degree to which the public sector can even exist without a robust private sector. There is no doubt that the private sector can survive without big government. So what’s it going to be?
Rate this:
Share this:
Related
Posted on October 10, 2012 at 12:29 pm in Economic Development, Political commentary | RSS feed | Reply | Trackback URL