Tue, 15 Feb 2005

A fight to keep their homes

This is a cause that I can identify with wholeheartedly. The theft of one's land (and let's call a spade a spade: it's theft) for use by the cronies of the local government is becoming a national problem here. I wish these folks luck in the battle, and will be following their progress.

But outright land theft is just the tip of the iceberg. A more sophisticated scheme for looting the local taxpayers (so-called "tax incentive financing" or TIF) has become the rule du jour for building new manufacturing and warehouse facilities in the US.

It works like this: Acme Widgets let's it be known that they are increasing the distribution of their widgets, and need a new warehouse that will employ X number of people. Local governments then bid against one another in an attempt to convince Acme to locate the new facility in their community. And what do they bid with? Why, tax incentives, of course. Community A offers complete exemption from property taxes for five, ten or twenty years. Community B counters with an offer to sell municipal bonds to actually construct the facility. The community C jumps in the game and offers to do both. Local governments justify this as "job creation"- after all, all of those X workers in the new Acme plant will be locals, right?

I contend that these kinds of deals actually hurt the local economy. Once a community starts down the primrose path of issuing concessions to businesses to locate there, it won't be long before they have to start offering tax incentives to existing businesses to remain there. And before long, your tax base is so eroded that local services go down the tubes entirely.

So the next time you get your property tax bill, take the time to ask how much of it goes to finance bonds for the benefit of private businesses. You may be surprised.

Case of Conn. residents whose homes were given to a private developer moves to Supreme Court.

(link) [Christian Science Monitor | Top Stories]

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