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COMMUNITY VOICE

That business abatements create high-paying jobs cannot be proved

Friday, March 8, 2013 - 12:01 am

Self-serving misinformation is about the best I can say about Mike Landrum’s letter to the editor of Feb. 22. But that’s his job.

He wrote about the local tax abatement system whereby the city and county give tax breaks to companies for creating jobs — “high-paying jobs,” according to Mr. Landrum, the president of the Chamber of Commerce.

He goes on to call cutting corporate taxes “an essential tool to attract and retain” businesses in Allen County, which “build and strengthen” our economy.

Hooey!

First, while promising investors lower taxes may be an essential tool, nobody in local economic development can show the first job created because of tax abatements. They don’t even have a definition of what a job is. The city’s manager for the program said as much to Council. They don’t know for a variety of reasons, including the annual results are self-reported by the companies, the reports are a hodge-podge of apples and oranges numbers and neither city nor county have the staff to even spotcheck to determine compliance.

What did President Reagan say? “Trust but verify.”

It may be an essential tool, as Mr. Landrum blathers, but they really don’t know whether the tool works. Whoops! It certainly does work for the companies’ bottom lines, but they don’t know whether it works for us taxpayers.

What we do know is that hundreds of millions of tax breaks are on the books. These add to the bottom lines of companies. Recently, one company promised to create one whole job for a sizable break on a $7 million project. One job. What’s worse, Council’s rules say that company only has to fulfill three-quarters of its promises to continue receiving the break, so the company need not create a full-time job at all. And Council usually forgives a company if it fails to comply: There is always a good reason. Council, on behalf of the taxpayer, can’t “claw back” tax abatements. Once the tax break has been given it is gone, regardless of whether the first job is created. Gone.

Council first must declare an area blighted in order to give a tax break. The idea is that incentives should be given to restore old plants and neighborhoods where unemployment is high. Lutheran and Dupont hospitals were both declared blighted areas and got large tax breaks to keep your health care costs low. (Do you believe that?)

And, famously, Vera Bradley caused 600 local jobs to be lost in exchange for a tax break that promised to create 490 jobs. That is the kind of behavior our government encourages. Anything, they say, for economic development.

Council gives breaks for the purchase of new equipment, say from China, in exchange for a tax break. The result is usually the loss of jobs through automation. Now, higher efficiency should be a goal, but we should not subsidize companies that buy Chinese only to put your neighbors on the unemployment line at your expense. That is the sort of behavior Mr. Landrum seems to encourage.

He goes on in his letter to talk about “engaged community stakeholders” who contributed to rewriting the rules. More hooey. For years Council had been nothing but a rubber stamp for these tax breaks, not asking the first question, just a quick “do pass.” The people who pointed out the discrepancies were not invited to participate in the rewrite. Instead, County Council President Larry Brown, who self-anointed to lead the rewrite, made a valiant effort to keep critics, the media and the rest of the taxpaying public from participating or even listening to the process. Mr. Landrum’s Chamber people, however, were invited. The companies were there, but you, the ones who have to make up the difference, were not. The rewrite was an insider’s job.

You see, when these tax cuts go to investors, you make up the difference. Investor tax breaks cut from what would have gone to roads, schools, parks and other city, county and government responsibilities. If the services are to be maintained, then the tax burden shifts to you.

So, Mr. Landrum promises “higher than average wages” in exchange for handsome savings, but that cannot be proved. In fact, he cannot prove that any jobs have been created, only that his clients have saved tax dollars at your expense.

Jim Sack is a resident of Fort Wayne.