Up and Coming Weekly is a weekly publication in Fayetteville, NC and Fort Bragg, NC area offering local news, views, arts, entertainment and community event and business information.
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6 UCW JUNE 12-18, 2019 WWW.UPANDCOMINGWEEKLY.COM one year special $ 15 for UP & CoMING WEEKLY rEadErs oNLY you save 89% off Tv GuIDe MaGaZINe Get A GreAt DeAL from tV GuiDe mAGAzine start Your subscription online, By Mail or Call online: tvguidemagazine.com/newsoffer mail: complete order form below call: 1-800-365-1940 WHeN CaLLING use PRoMo: K6fNsWPZZ Every issue delivers inside scoop on your favorite shows Breaking news keeps you in the know Highlights help guide you to what's worth watching Your favorite stars take you behind the scenes 28 Pages of easy-to-use primetime listings GrEaT rEasoNs To sTarT YoUr sUBsCrIPTIoN OPINION When Gov. Cooper insists, for example, that North Carolina shouldn't cut state corporate or franchise taxes across the board but that our state should devote more tax incentives to film and TV production, he is suggesting that media companies are more valuable to the state's economy than other kinds of firms are. Photo by Jakob Owens on Unsplash Don't play favorites with business taxes by JOHN HOOD Although it may not appear so, the leaders of both major politi- cal parties in North Carolina favor lowering the tax burden of large businesses. eir real dispute is about the scope and magnitude of the tax relief. Democratic Gov. Roy Cooper has consistently opposed recent state budgets, crafted by the Republican-controlled legislature, that reduced the corporate tax rate from 6.9% in 2013 to 2.5% today. is year, Cooper seems likely to veto whatever budget emerges from the General Assembly, in part because it will contain a cut in franchise taxes, which tax the value rather than the net income of a business. e administration's spokes- man, Ford Porter, put it this way after the Senate passed its budget plan: "Governor Cooper will con- tinue pushing for a budget that represents middle class families instead of special interests and corporate shareholders." But Cooper has also requested and enthusiastically supported big tax incentives for companies that moved to or expanded their operations in North Carolina, including multi- million-dollar packages for Lending Tree, Honey- well, equipment manufacturer Greenheck Group, biopharmaceutical firm Cellectis, and Charlotte tech company AvidXChange, among others. More generally, Cooper and other Democratic leaders have sought to restore, protect and expand tax breaks for politically favored industries such as solar energy and film production. It's not necessarily a contradiction to favor large but narrowly tailored tax relief over across- the-board reductions. It does require making certain assumptions — and they ought to be clearly spelled out so that North Carolinians can decide for themselves whether the assumptions are reasonable. One such assumption is that when it comes to reducing state tax burdens, some but not all com- panies are "worth it." ey are more important to the state's economic vitality, one might say, either because of their sheer size or their expected fu- ture growth in sales, investment and jobs. Another assumption is that some companies are more responsive to taxes than others. If ACME Manufacturing is going to do business and em- ploy people in North Carolina at roughly the same level regardless of how much tax it pays, the state might be better off collecting the revenue gener- ated by the higher rate and spending it on public services, or so the argument goes. On the other hand, if Ach-Mee Manufacturing won't come to or stay in the state unless it gets a tax break, North Carolina ought to give it to them. Finally, and most importantly, advocates of targeted tax relief assume that they or some other state officials are capable of reli- ably distinguishing the worthy corporate recipients from the unworthy ones — that is, they can know with confidence which companies are economically vital and most sensitive to tax burdens. When Gov. Cooper insists, for example, that North Carolina shouldn't cut state corporate or franchise taxes across the board but that our state should devote more tax incentives to film and TV production, he is suggesting that media companies are more valuable to the state's economy than other kinds of firms, are more likely to do business elsewhere if they don't get their way, or both. ere are surely North Caro- linians who find these assump- tions plausible. I don't. I think economies are far too complex a set of systems to be measured, forecast and planned at that level of detail. I don't think it wise to put state officials in the position of choosing among "worthy" businesses or industries, which I suspect will inevitably lead to political favoritism and perhaps even rank corruption in the long run. Of course, even if it were technically feasible and politically sustainable, I still think it would be grossly unfair to tax companies differently based on size, location, average wages or industry. Uniform taxation advances both fairness and efficiency. If a billionaire came to your county and offered to live there in exchange for exempting her mansion from property taxes, on the grounds that she'd boost the local economy by spending lots of money, wouldn't you want your county commissioners to say no? JOHN HOOD, Chairman of the John Locke Foundation. COMMENTS? Editor@upand- comingweekly.com. 910-484-6200.