The current civil war being waged in the United States still puts state versus state, but it’s not about human dignity and slavery of an oppressed race of people. This civil war is economic, as states try to under-cut fellow states through taxation or should I say tax give-a-ways.
Every state and city has a program that creates “tax incentives” to attract the big boys to their towns and cities. Once the corporation gets a whiff of these incentives it’s like blood in the water to a shark, they smell it miles away.
Tax increment financing (TIFs) are widely used as a way to lure major corporations away from one city and into another. This has been marketed as a job creator. Unfortunately most of the times the corporation lays off people in one city and hires the same amount of people in another, job creation is net zero. In fact former U.S labor secretary shares my belief, he is quoted in the New York Times saying, “They’re merely moved around. Meanwhile, the public spends a fortune subsidizing these companies. But there’s no way that mayors or governors can withstand the heat once a major company announces it is thinking about leaving.”
Major corporations will continue to pit state vs. state and city vs. city until they are essentially operating tax free.
Here is a short list of tax breaks and incentives various states have given in order to “create jobs”.
In a Time magazine article, Illinois gave $240 million in economic incentives to a large retail chain to keep its corporate headquarters and 5,400 workers in the state instead of leaving.
Alabama gave $253 million in economic incentives to a foreign German auto manufacturer to build an automobile-assembly plant near Tuscaloosa.
Pennsylvania gave $307 million in economic incentives to a Norwegian global engineering and construction company, to open a shipyard at the former Philadelphia Naval Shipyard.
What needs to happen at the federal level is enactment of Senator Bernie Sanders’ (I-VT) idea. If a state is involved in this practice of undercutting other states, federal highway funds will cease, seeing that every state relies heavily on those funds, this would serve as a strong deterrent. State legislatures can do the same to prevent this practice amongst the municipalities.
Corporations and conservatives want to further increase the cost of government onto the people. For every TIF that is given to a company, that is an increase in property tax on a small business or reduced services in our communities.
Jobs are created through increased demand, not decreased taxes. The sooner the American public realizes that, the better off this country will be.