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?
No Loss for Words 
Green Energy Costs YOUR Green
by Steve DanaI saw another headline this morning for a failing Green Energy company backed by federal loan guarantees. Like the now famous (and defunct) Solyndra solar panel manufacturer that soaked the Department of Energy for $500 million, Abound Solar only actually got $70 million of the $400 million in their guarantee before they went TU.
My question is this, “Are there any Green Energy manufacturing jobs that pencil out?” The President seems to be batting a thousand with his Green Energy failures and that can’t be good for the industry. I have to believe that there are businesses actually developing products that make sense while also meeting Green Energy standards but I’m having difficulty finding them.
In order to quiet his critics on this Green Energy problem, the President and his Department of Energy maven, Steven Chu should release a list of the successful businesses they’ve funded so the naysayers will go away.
I didn’t turn over too many rocks in my search, but Googling “Green Energy Success Stories” didn’t turn up any. It seems that all the news is bad.
Alternative energy sources that qualify under the Green Energy guidelines are generally thought of as solar, wind and maybe geothermal with a little dabbling in tidal energy potential and ocean wave energy.
There is no doubt that the sun shines a lot and the wind blows a lot but when you compare the cost of extracting that energy on a BTU basis there is no way they can compete with conventional sources of energy.
When President Obama was a candidate in 2008 he told us about his plan and how it would affect us all. He said “by necessity, energy costs will have to rise.” I doubt you would have expected gasoline prices to double or triple in four years or to see the market price for electricity increase to twelve or fifteen cents per KWH when we’ve customarily paid six cents.
Most of us would be happy if a source of energy were available that heated our homes, operated our businesses and fueled our cars cheaply while meeting ever increasingly stringent government regulations but with the technology available today, that is just not possible.
As consumers, we need to decide what our priority is; affordable energy supplied by American coal, American hydro-electric, American nuclear and American oil or expensive “alternative” energy driven up by mindless government regulation.
This consumer is in favor of a “best management practices” approach. If we agree we want to pursue all options but in order to keep prices lower to minimize financial impacts to families we favor coal, oil, nuclear and hydro as the preferred sources and apply cost/benefit analysis to regulations to see if the benefits justify the cost increase then we can move ahead sensibly.
The government regulators today give no consideration to fiscal impacts when they propose new regulation.
When I was an elected official many years ago, I proposed to my city council that along with all the normal mumbo jumbo fed to us in agenda bills there be a modest fiscal impact analysis so as we contemplated the merits of a piece of legislation we could also understand if it created a financial burden upon one party or another. Staff was not in favor and ended up defeating my proposal because it created too much of a burden on what was said to be an already over-worked staff.
Regardless of what we are told, every piece of legislation passed by every government body carries with it a financial burden. In the case of my proposal, the burden would be borne by city staff to the benefit of the public. Shot down! In cases where the burden is shifted to non-voters or numerically small impact group members, all the better since they can’t kick me out of office. In cases where the burden ends up being just another layer of government regulation creating taxes or fees paid by everyday citizens, the message sold is that it’s for the “greater good.” It had to be done!
Elected officials like to pass legislation but they don’t like to take responsibility for the financial impacts to their constituents. If there is a compelling reason to pass a new law, at least determine who will be expected to pay for it and whether it’s fair for them to be hung with the bill.
The alternative energy supporters would have us believe that if we don’t do something radical right now the world will come to an end. Level headed thinkers agree that we should be making efforts to minimize environmental impacts of existing energy sources but not at the expense of the industry. When the government prevents the private sector from mining coal at all, the country suffers a catastrophic increase in the cost of energy and the loss of jobs. When the government prevents the drilling for oil or building of refineries the country suffers a catastrophic increase in the cost of energy and the loss of jobs.
If the government gave you the choice between the electric power rates of 5 cents per kilowatt hour or 12 cents per kilowatt hour which one would you choose?
Or if the choice was gasoline for $2.00 per gallon or $5.00 per gallon which one would you choose?
Those are choices that have already been made for you by your elected officials and a lot more unelected bureaucrats/regulators. They have chosen the more expensive options because someone decided it was okay for all of us to get hammered to benefit narrowly defined interest groups.
If you were given the choice of saving the spotted owl or having less expensive building materials which one would you prefer?
Alternatives always come at a cost and the government needs to take into consideration the hidden taxes they levy when they drive up the cost of commodities by implementing marginally effective government regulations.
The President and the Green Movement are so desperate for their agenda they are taxing our whole country to death to achieve it.
The reason the Green Energy companies fail is because they don’t produce a competitive product. The demand for their product is driven by government mandate and not the fact that it makes sense to the average consumer.
Develop a fuel cell that can replace the gasoline engine in my car for the same selling price and competitive fuel rates and I’m there. Until then, throwing government money at a loser of an idea is a loser of an idea.
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