Relocation Bribery Should Be Outlawed


photograph by Yuri_arcurs |

Government bribery to steal jobs from 
one American city and bring them to another doesn’t make a lot of sense for America. It should be stopped.

A PILOT (payment in lieu of taxes), as every taxpayer should know, is a device used by state and local politicians to attract business. Virtually every state offers to reduce and/or delay taxes, or gives money up front to attract businesses from elsewhere. Counties and cities do the same.

Decades ago North Carolina plundered the New England textile industry, only to lose much of it later to Mississippi and Arkansas. Mississippi also relieved the Tarheels of a substantial portion of its upholstered furniture industry. North Carolina sucked much of the case goods furniture industry out of the Midwest only to lose most of it later to Asia.

In Tennessee PILOTs are most popular in Memphis and Shelby County. Locally we have $2.74 billion worth of property not paying full taxes due to PILOTs. That’s almost double the amount in Chattanooga and Hamilton County, nearly 10 times more than Knoxville and Knox County, and a whopping 274 times the amount in Nashville and Davidson County.

There are big problems with these tactics.  First, few politicians are qualified to judge the return on a PILOT or similar bribe. Consider our city council and county commission. At the most, each may have one or two members qualified to make such bets.

Another problem is oversight. In most cases PILOTs involve a promise of new jobs that may not materialize. Who’s keeping score? Also there are no boundaries. If you offer incentives to outsiders, local businesses will expect the same. Nike is pressing Oregon for no increase in taxes for at least 40 years if Nike stays to build a new headquarters with 500 new jobs.

On a smaller scale, the same thing already has happened locally.

This idea of a handful of politicians using taxpayer money to back their bet in a game they seldom know much about has bad odds for taxpayers. The New York Times quoted one economist, “How can (they) even talk about rationalizing what (they’re) doing when (they) don’t even know what (they’re) doing?”

The Times found that states, counties, and cities give up more than $80 billion annually for such corporate carrots. General Motors has received $1.7 billion in local incentives in just the last five years. Some cities already are holding the bag.

An officer of Kansas City’s Downtown Council said, “There ought to be a law against what I’m doing.”

A group of Ohio taxpayers filed suit after Toledo offered Daimler Chrysler $280 million. They lost when the court decreed that taxpayers have no legal standing to challenge the state’s tax actions.  If not taxpayers, who does?

We need lower federal corporate taxes to keep our factories in America, and there ought to be a federal law to prohibit a state, county, or city from using taxpayer revenue or credit to entice business re-location.

There are good reasons for companies to relocate. Government bribes shouldn’t be one of them.

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