Politicians go on 'jobs poaching expeditions'
Politicians often fixate on the immediate bump in job growth they want to generate by dangling taxpayer money in front of a corporation, in the hope that it will entice the company managers to relocate the firm and all its jobs. It's an all too common sight in politics today.
But what about the investments, like more buildings or new equipment, the private sector never makes because taxes are kept high on other businesses to pay for these corporate welfare programs? Or the jobs local businesses lose when they have to close their doors because government policies favor their competitor? Those foregone investment opportunities and the absence of true competition are the biggest costs of public investment schemes, although they don't show up on paper.
Some policymakers, thankfully, recognize these costs. Mark Funkhouser, mayor of Kansas City, Mo., was interviewed recently by the New York Times and described the practice of handing out subsidies as a "jobs poaching expedition" that doesn't create any new job growth overall. He explained, "What politicians are doing is creating the illusion that they are creating jobs by short-term fixes that actually weaken the region's ability to compete."
We need to base policy on an appreciation for the unseen costs of jobs poaching. The Legislature should repeal policies that favor some businesses over others, and avoid the creation of new spending programs and tax laws that reinforce such favoritism. Then, policymakers should adopt fundamental tax reform that couples low, uniform tax rates with a broad tax base as the best way to generate healthy economic competition that creates jobs and wealth for all Arizonans.
Stephen Slivinski is senior economist at the Goldwater Institute.