Written by: Jim Hansen
Thursday, August 02, 2007

Tax policy is not always easy to talk about. But when people are reluctant to talk about it, big corporations have a huge influence on what our government representatives hear and what the media reports. That appears to be happening this week in Boise. Not many folks there. Some very thoughtful presentations...

The spin that most powerful corporate lobbying groups put on the issue still influence how legislators look at the issue. We assume when a company sits down to negotiate with our representatives (either in the legislature or in city or county government) that there is a balanced discussion. In fact, far from it.

When big corporations extract a "capital incentive" out of our government it often costs us all more in lost revenue than any benefits that actually come from the encouraged investment. In fact, studies presented to the legislators on Wednesday showed that firms that regularly extract these "incentives" from state and local governments tend to reduce jobs, while other companies (usually small businesses) that don't get the incentives create jobs. Why? Because the firms that get the deals gradually shift from exclusively focused on the production of goods and services to an added focus of "farming" subsidies from government. These deals overwhelmingly favor large companies leaving small businesses with less services and no similar incentives. They also strain our government's ability to plan and invest in long-term infrastructure.

Another down side when one town gives away "capital incentives" to big companies is to poison the relationship that town has with neighboring towns, counties, school districts and other public jurisdictions. They have to pick up part of the cost too. These deals encourage sprawl. Dr. Stephen Cooke from the University of Idaho who laid out this research also pointed out that these kinds of deals are subject to the worst kind of cronyism and abuse. The fact that the big companies can give legislators and city elected officials campaign contributions exacerbates the imbalance in negotiating roles and fuels public cynicism.

This was just part of the discussion our legislators heard yesterday.

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