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Thread: Towns Hand Out Tax Breaks, Then Cry Foul as Jobs Leave

  1. #1
    Cyburbian Plus
    Jun 2003

    Towns Hand Out Tax Breaks, Then Cry Foul as Jobs Leave

    Headline from the New York Times, October 20, 2004
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    article at: http://www.nytimes.com/2004/10/20/na...?oref=login&hp

    "Most communities that lose business afterward lick their wounds and walk away, as Putnam County plans to do. But in Galesburg, some people have decided to take a stand, and it has split this community, showing the challenges of fighting back against a corporation."

    "...some people say they are afraid that they may scare off future employers. They question whether suing to reclaim tax breaks will hurt the community even more, adding that they have to pay companies to compete and that it is the cost of doing business in a vulnerable town."

  2. #2
    Oct 2003
    Scottsdale, AZ
    While it can be a good tool, I think that the tax incentives have gotten a little nuts. The cities here compete against each other and end up giving too much away. I remember when they were used to bring in large employers like Boeing, Intel, and Motorola. Seems now it is okay for Costco, Wally's, and other retailers to get the discount. They are trying to control the handouts here, but the mayors are divided. Go figure.

    EDIT: you can get the password to NYTimes here.

  3. #3
    Cyburbian The One's avatar
    Mar 2004
    Where Valley Fever Lives
    Blog entries

    Your right....

    The tax incentives have been used poorly (mainly pushed by city managers trying to look good) without much thought into the ethics or future of the City. Example: Giving one local supermarket a multi-million $ break but not another (simply because one is aesthetically more pleasing....) Limiting competition and creating higher prices for residents anyway....
    “The way of acquiescence leads to moral and spiritual suicide. The way of violence leads to bitterness in the survivors and brutality in the destroyers. But, the way of non-violence leads to redemption and the creation of the beloved community.”
    Dr. Martin Luther King, Jr.
    - See more at: http://www.thekingcenter.org/king-ph....r7W02j3S.dpuf

  4. #4
    Forums Administrator & Gallery Moderator NHPlanner's avatar
    Apr 1996
    New Hampshire
    I've said it before, and I'll say it again.....stories like this make me glad that I work in NH, where there is no such thing as tax incentives.
    "Growth is inevitable and desirable, but destruction of community character is not. The question is not whether your part of the world is going to change. The question is how." -- Edward T. McMahon, The Conservation Fund

  5. #5
    Cyburbian Cardinal's avatar
    Aug 2001
    The Cheese State
    There are numerous fundemental flaws in the way most incentive programss are conceived. That is one of the themes of an article I am currently writing to challenge the economic development profession. Problems include competition that leads a state like South Carolin to give Mercedes $167,000 per job(!) to the very notion of job creation as the primary purpose. What if, instead of requiring Maytag to create jobs as a condition of its incentive, the city had worked with thte company to fund changes that would have reduced operating costs and raise productivity, so that it could effectively compete with inexpensive labor in Mexico? Sure, some jobs might have been lost, but the company might still be there.
    Anyone want to adopt a dog?

  6. #6
          roger's avatar
    Jul 2004
    austin, tx
    Interesting article. I think in the case of Maytag the town erred in part by not considering the fact that, in terms of employment, manufacturing in this country has been declining for a very long time as the economy shifts from goods-based to service-based. It is nobody's fault, just the ongoing march of globalization. In other words, they were throwing good money after bad.

  7. #7
    Cyburbian Rumpy Tunanator's avatar
    Dec 2003
    We have a really flawed system here.

    In New York, State Comptroller Alan G. Hevesi said in an audit this year that a program that gives millions of dollars in tax breaks to businesses that promise to create work ended up rewarding some businesses that lost jobs. Other state officials disputed those findings.

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