by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor, John Locke Foundation
Perhaps one day the editors of The News & Observer will adopt a consistent position towards taxes, but it’s not today.
Is it proper state policy to offer income tax cuts to businesses? On May 8, 2017, the editors held it was decidedly improper. It wasn’t “governing” nor “smart stewardship of the public’s money.” It was “wasting the public’s money, throwing it away for the benefit of a few.” It was “lackluster, shortsighted government,” not “steering the state … with foresight.”
They also wrote against businesses tax cuts on the basis that they “already have been excessive in a state that has long ranked one of the most accommodating for business.”
In their mind — or perhaps what they wished you to have in your minds back on May 8 — is the idea that North Carolina is so accommodating for business that we don’t need to offer a lower tax environment for them to want to come here.
They were upset, friends:
And it’s interesting that Berger speaks of “your money and your bank account” after being so generous with tax cuts for business, giving up money that might have gone to help all the families of North Carolina. …
And yet given the opportunity to really do something for all, Berger and his sidekick and their mates look only to help business and the wealthy. So that’s what they are going to do.
This isn’t governing. This isn’t smart stewardship of the public’s money. It’s wasting the public’s money, throwing it away for the benefit of a few. This is lackluster, shortsighted government, not steering the state through the early 21st century with foresight.
But today? They’re really upset that “Berger and his sidekick and his mates” are not — repeat, NOT — giving tax cuts to business. A specific kind of business, this time. Outside film production companies.
How upset? They called it an “utterly dumb idea.” What was utterly dumb? They weren’t referring to a refundable tax credit to companies with so little in-state tax liability that the credits amounted to shelling out over $80 million in 2014. A program that was likely unconstitutional because it was an open-ended draw on the State Treasury without an act of appropriation. A program that, unlike all other incentives programs, didn’t even require recipient companies to fulfill long-term job creation promises or meet capital-investment goals.
No, no. They were referring to ending that and replacing it with a grant program with a cap on how much it gives away. For real; read this:
One of the gaffes, of many, by the Republican-led General Assembly was the utterly dumb idea of doing away with a tax incentive program that paid out $80.7 million to filmmakers in 2014. The filming of movies, television shows, commercials and other related projects (“Talladega Nights,” “Homeland,” “The Hunger Games”) had brought tens of thousands of jobs to the state and millions of dollars to merchants in places where films were made. …
Now a grant program, and a refund to production companies of part of their in-state production expenses, is helping, but not enough. The film tax incentive program needs to be restored in full, and only then will Wilmington and other sites where film producers did big business again see the kind of business they once did. Republicans should undo the damage they did.
If you wish to puzzle out the N&O editors’ approach to taxes some more, try to figure out what they really think about sales tax increases.
Or you could read about why the film grant program will be a net money loser for the state, like all other state film incentives programs, and why the better approach is to lower taxes across the board to incentivize job creation and investment in untold numbers of industries, not just one.
State and local officials should resist the urge to chase specific companies and industries with incentives.
Instead, they should make sure the economic climate here is suitable for many different enterprises, [including] small business ventures and sole proprietorships. Those get overlooked by politicians seeking big-splash headlines and ribbon cuttings.
Nevertheless, small businesses quietly make up 99 percent of all businesses. Removing unnecessary government impediments to small businesses may seem less “splashy,” but it’s more helpful to the overall domestic economy and local jobs.