The federal and state tax codes in this country are confusing at best and unintelligible at worst. In fact, there is a whole group of people who dedicate their entire adult lives to breaking these codes and using their knowledge to help others. We call these enlightened beings “accountants”, and without them, many of us would be lost at sea inundated by wave after wave of tax legislation.
Why is the tax code so expansive and how do its provisions harm the general public? The tax code is so oceanic because there are so many special interests that it tries to appease. Needless to say, when the law favors special interests, the public suffers. Laws should be made that apply equally to everybody, not extended to privilege specific corporations or industries.
Let’s take HB 1015, “Economic Development and Finance Changes”, sponsored by Reps. Julia Howard (R-Davie) and Edgar Starnes (R-Caldwell), as an example. Simply put, this bill, ratified by both chambers on Thursday, June 21, gives tax breaks to companies willing to invest at least $100 million over the course of two years in struggling counties. Special provisions are included for those who invest in port towns where at least 11 percent of households earn a yearly income of $15,000 or less. The bill also creates “the Industrial Development Fund to provide funds to assist the local government units of the most economically distressed counties in the State in creating and retaining jobs in certain industries.”
At this point, you’re probably wondering what’s so bad about the government trying to help out poor counties. How could anyone not be on board with “economic development?” Few would deny that the sponsors of this bill may very well have good intentions. But these good intentions cannot overcome faulty economic premises.
Karl Marx ironically once wrote, “the road to Hell is paved with good intentions.” What policymakers want HB 1015 to do, and what it actually does, are two different things. It unfairly benefits “certain industries” over others that may be more profitable in the long-run. Because of the targeted tax credits, investments that may not otherwise be viable come to fruition, utilizing scarce resources that may be more urgently needed elsewhere. Such policies distort the essential pricing and profit/loss mechanism so crucial for an efficient allocation of resources. Wanting to see struggling counties improve their economic condition is a noble goal, but further politicizing economic decisions has been proven to be a failing recipe for hundreds of years.
Conservative policy makers need to understand that if they truly want to be pro-business, they need to jump ship from their corporatist practices and consider a meaningful change in economic policy. Being pro-business does not mean favoring certain businesses over others. It means giving businesses an equal chance to compete by lowering taxes for all, including the consumer. Only free-market solutions can rescue us.
For continuing to weigh down a drowning economy and for muddying up the already murky waters of the tax code, HB 1015 wins our award for “Bad Bill of the Week.”