Taxes and business

* Joe White, in the Nov 25 Letters to the Tennessean, argues that financial incentives to lure a business to a county or state are analogous to reductions of income-tax and capital-gains tax to enrich the already rich. He claims that the economic benefits for the rest of us outweigh the economic costs to the rest of us.
* I wonder whether an honest accounting of losses and gains in our business-luring programs would support his thesis. What about American Airlines, Dell, the arena, the stadium, etc. My property-taxes have increased painfully since these deals were made. It would be rational for all sub-national governments to agree on a federal law forbidding financial incentives to influence locating of businesses among states and counties. Then businesses would go where their prospects are best, not to where they have been bribed to go. HCA would almost certainly stay in Nashville without a bribe, since its founders, owners and officers have deep roots here.
* Anyone or any business that could naturally be in Nashville but chooses to go elsewhere is giving up the opportunity to be in the most interesting place in the US--an island of intellectual and cultural ferment in a State that rivals paradise.
* Ethically speaking, it doesnn't matter where a business moves. God (ie an objective observer of good will) might care about per capita happiness, not where that happiness happens.
* The idea that tax-paying employees of a business will improve local revenues is flawed, in that those employees must be provided infrastructure and services that consume revenues. Nashville is already too crowded. Try driving on any of our arteries, especially Woodmont Blvd or Harding Pl most hours of the day.
* The prosperity of a community depends on its products and services that are bought by ousiders. Competing for such businesses could be in the self interest of locals.
* Finally, the fees collected from businesses by brokers/consultants for negotiating their tax breaks are obscene, about 30% of the tax break. That offends me.
* I wonder whether Joe White is parroting the Reagan/Laffer narrative or has studied the economic data bearing on his claims about tax cuts.
* The data show that Kennedy's economic boom began in 1968, 3 years before Kennedy took office and 5 years before his tax cut, which had no discernible effect on revenues. After the Reagan tax cuts, revenues abruptly fell about 20% below their pre-Reagan trajectory, continued drifting down from that trajectory until 1993, then began rising when the top income-tax rate rose from 30% to 40%. This revenue rise was broken in 2001, due to financial turmoil following the 9/11 attacks, then returned in 2004 after the 2003 tax cuts but in fact due to a housing bubble that popped three years later. We have little to show for tax cuts except our ballooned government debt.