Politicians love to use their power to dole out favors and privileges to politically-connected special interests. They also love to interfere with the economy, attempting to impose their preferences upon investors and consumers through a hodgepodge of taxpayer handouts and targeted tax breaks.
House Bill 89 Omnibus Economic Development Improvements, sponsored by Reps. Susi Hamilton (D-New Hanover), Rodney Moore (D-Mecklenburg) and Edward Haynes, Jr. (D-Forsyth), includes no less than 61 pages of such political favoritism.
A brief overview of the bill reveals it contains the revival, creation, or extension of several corporate welfare schemes that have been championed by members of both political parties in the NC General Assembly. These include (but are not limited to):
- The creation of a “Job Catalyst Fund,” which would give taxpayer dollars to specific manufacturing companies making capital investments above a prescribed threshold.
- The revival of historic preservation tax credits, which exempt certain state taxes if a business invests in a building determined to be “historic.”
- Bringing back the tax credits for film production in the state, which provide a tax credit for television and movie film production expenses.
- The New Market Jobs Act, which provides tax credits for specific equity investments, specifically ones made in areas deemed to be “low-income communities.”
- The extension of a sales tax exemption on the purchase of aviation fuel by commercial airlines set to sunset at the end of this year.
- The extension of the renewable energy tax credit, also set to expire at the end of this year.
Civitas for years has criticized government meddling in the economy. In an economy free of political distortions, consumers hold the power over how scarce resources are used by producers. Through our purchasing decisions, those entrepreneurs who most efficiently meet our most urgent needs are rewarded with our dollars and succeed. As long as all businesses play by the same rules, consumers are king.
When politicians, however, distort the rules to give some industries or businesses an advantage not enjoyed by all, some businesses that would not otherwise succeed are empowered to stay in business. In this case, the political class helps shape the structure of the economy’s stock of productive resources, imposing their preferences in place of that of consumers. Such distortions represent a shift in power from the many (consumers) to the few (the political class).
Moreover, these distortions ensure that scarce productive resources are not being employed in their most productive uses. As a result, the economy is less efficient and we are made worse off.
Because it creates an even more uneven playing field for businesses, shifts power to the political class, and stunts economic growth, House Bill 89 is this week’s Bad Bill of the Week.