What’s wrong with incentives? Nothing, if you don’t mind handing money to developers
I extended both hands level in front of my face, left hand representing the property tax base, right one standing in for the tax rate.
“See,” I told my friend, “when the property tax base goes down…” My left hand scissored downward 6 inches. “Then, to bring in the same revenue, the tax rate must go up.” My right hand scissored upward 6 inches, leaving a foot of empty air between.
“That’s why taxes on our homes are high,” I told her. “The higher tax rate.”
That’s also where my friend and I — and probably you as well — are trapped. Because tax giveaways to wealthy companies lower the tax base, rates must scissor upward on everybody else to raise the required revenue.
No, no, no, the business lobby will argue. They are not “tax giveaways.” They are “incentives” to build something: strip malls, big box stores, supermarkets, luxury apartments, a factory paying low wages in a former cornfield.
Or, as in the case of Olathe’s Great Mall of the Great Plains and other projects, our taxes help rebuild with a fresh gush of subsidies after an earlier subsidized project failed. Thus we help bail wealthy business people out of their folly. “Incentives,” they call these tax giveaways, as if without them no one otherwise would build here in Johnson County, the richest and most populous county in Kansas.
Workers earning the rotten Kansas minimum wage of $7.25 hourly live in the hard world of free enterprise. But here the wealthy are incentivized — paid off out of the taxes we pay — to get something built. And then often rescued if they fail.
Most giveaways save the builder “only” half the tax bill and last “only” a decade. The very same deal for my modest 58-year-old Shawnee home would save me more than $20,000 over 10 years. If I seem frustrated, that’s because it was in 1963 that I wrote my first Kansas City Star story evaluating tax giveaways — to no effect.
“Jobs, jobs, we create jobs,” cry the leaders who hand out these freebies. Sometimes the jobs even pay a living wage. Often they do not. Our public contribution leaves clerks and janitors and maintenance staff stranded at pitiful wages without even a stool to sit on during long shifts. The corporations often speak of “public-private projects,” yet the public ends up owning nothing. Private business owns all of it.
Competition. They tell us that’s why we must give away taxes to attract wealthy builders. Because if we don’t, someone else will.
It’s Olathe (with 42 projects active now) against Edgerton (29) against Lenexa (24) against Shawnee (17) against Overland Park (seven) against Merriam (three) and now even against tiny DeSoto, where the Panasonic Corporation — incentivized by a billion or so taxpayer dollars — is building an auto battery factory. The giveaways also pit Kansas against Missouri, each against the other and all other states of the Union, from sea to shining sea.
An old Star colleague of mine from the 1960s, James B. Steele, wrote a book refuting the competition dodge. He asks the federal government to tax back every penny our states give away in this insane contest. That would level the playing field and return rich developers to the same free enterprise system we ordinary Americans navigate.
So skip the smoke and mirrors. If we must subsidize corporations, just tax us all outright and hand money straight to developers. Then we will at least know what we’re doing.
That also would switch the scissoring trick with two hands. Swelled at last with fair taxes paid by rich developers, the tax base would go up. High tax rates — so painful to homeowners and long-established businesses — would slide downward. That’s the outcome I’ve been yearning for since 1963.
Contact the columnist at hammerc12@gmail.com.