An activist group, “Progress North Carolina” made headlines. They put up signs to protest a candidate’s support of tax credits for businesses. The local daily seems to claim one party is evil and the other is good, but this blog is required by law to be nonpartisan, equal-time, and all that other stuff that salvages evil, crazy, and stupid ideas from outright dismissal when people are actually trying to get things done.
Anyway, the activists complained that the threshold is so high almost any privately-held business can take advantage of the tax. They claim it is rather wicked for legislators who own businesses to be self-dealing in such a manner. Not only that, the move is depriving the state of $336 million, or 5500 teacher salaries. Persons interviewed said they would much rather support teachers than business. The article doesn’t attempt give a column inch to the standard refutations.
Where does one start? North Carolina has one of the highest corporate income tax rates in the state, and that serves as a disincentive for businesses shopping across state lines for new locations. The article acts as if the activists truly believe what was portrayed on one of the signs: Business people accumulate money and sit on it. They’re crazy loons who lust after wads of money they have no intention of spending.
Oddly, those who argue so vehemently about job creation, as opposed to meaningful employment, didn’t catch that $50,000 per year could translate to one job created or saved per business assuming, as they did with their teacher argument, that all money would be channeled that way. But one must ask why the teachers want money. Surely, they do not intend to patronize businesses so dastardly hoarders can stuff their tuffets. If businessmen don’t spend their money, then why do economic multipliers weigh so heavily in arguments coming from a certain political direction?
The argument assumes people are pawns that move into position by government and stay put until the mighty hand of government moves them to another square. It doesn’t even grant humans as much intelligence as the behaviorists, which von Mises observed used animals and infants to predict human choice. However, LeChatelier has accurately articulated the truism that even molecules will realign to accommodate stress.
But then, the thrust of the article is that the tax breaks should have only been applicable to small businesses. That, of course, encourages businesses with threshold profits to become less productive in order to score the incentive. Contrary to popular belief, it is not the passing of money around that makes a healthy economy, but the production of more and better tradable goods.
