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If a deal's not a deal, it's a tax increase
January 4, 2010 - Mike Maneval
A group blog at the Web site of Reason magazine references an Associated Press story, the gist of which is "Cash-strapped communities have a message for corporations that promised jobs in return for tax breaks: A deal's a deal."
The AP report continues, "As the recession drags on, municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don't hire enough workers, lay them off or close up shop."
One such example cited by the Associated Press can be found in DeKalb County, Illinois, where Target's deal includes tax abatements for the promised creation of at least 500 jobs. When Target came up 66 short, DeKalb County told the firm they were dropping the tax privileges.
Reason's Matt Welch looks on such developments, in his own words, as "heartening," and I agree. The Associated Press reporter who penned the article summed it up well: A deal is a deal. And when certain entities are granted tax breaks, shifting the revenue burdens unto middle- and working-class households, in exchange for potential advantages that entity can offer - such as job creation - but then allowed to skate on delivering the advantage, it is in effect a type of tax increase on everyone else. Moreso, it is the sort of tax increase which grants no worker added pay or benefits and expands no municipal service to taxpayers, placing it quite possibly among the worst tax increases imaginable.
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