Pennsylvania Tax Incentives Questioned

I am not sure if there was a time when I was a true proponent of tax incentives for business growth. There are too many problems with such policies and as the article states, the results can be minimal, even negligible. Number one, if tax incentives become a competition among different states, where does the race end? One state offers a two year tax abatement, so the next state offers five, then next twenty years, and so on. In the end the citizens get hosed as each new deal assures they will get less tax revenue for their area irrespective of how much the area grows with new businesses.
Additional examples of the people being flattened by the corporate steamroller include corporations receiving sweetheart deals from local communities, only to move elsewhere when the deal runs dry or when another deal comes along.

Note the article’s point is that tax incentives are used by companies looking for a location but they are the absolute last factor considered. Labor rates are a priority for location selection. Apply this to a real situation: A company chooses an area with extremely low labor rates. The area then gives the company a tax abatement. I think that this is a slippery slope, a self-perpetuating industrial slave machine that lowers wages and reduces the municipality’s income. Consider that this may be one of the cycles, (another being offshoring) that has helped reduce America’s standard of living, even assuring that generations x, y, z, aa, and bb have a lower standard of living their their baby boomer parents.

Looking at a top down view of taxation, I do not think that corporations should be taxed at all. Such tax gets passed onto the consumers in the form of higher prices, and reduces employee compensation and stock holder returns. (Lest you think I am a proponent of the wealthy investors, many of us average people own stock.)

What actions can increase technology development with no side effects? Individuals starting companies, angel investing, venture capital, and new business partnerships among others. I personally like to leave the government out of the equation completely. Every action the government takes results in even greater negative reactions. Just watch as a health care plan crafted in the name of providing health care to more people actually results in significantly increased costs for us citizens.