I oppose corporate hand-outs, but I call them “forced taxpayer investments”—-FTI. This happens when politicians pass laws so that tax money or tax breaks are given away to some industries, but not others, or to some companies, but not others.
All kinds of industries and companies have received tax money and tax breaks, with no voter approval: everything from insurance to restaurants to the Formula One racetrack scheme here in Travis County.
When tax break are given out, it means a higher tax burden for everybody else. And it hurts the competitors of the favored recipients, because the competitors not only don’t get the breaks, they also have to shoulder the extra tax burden that the favored company isn’t paying.
These schemes therefore impair free enterprise. They distort the free market—-both in the industry affected and also in the general market for investing.
What is the justification for this?
Politicians in favor of it claim that they are promoting “economic development.” They think that by magically picking the right company—-such as Formula One auto racing—-they are going to create jobs or “pump money” into the economy. Frequently they brag about numbers they have printed up. It is important to realize that these are speculative projections. Every failed business begins with positive projections.
Politicians also talk about causing money to “circulate” or even “stimulating” more money. In my view, there is a huge flaw in these claims: They are treating the tax dollars allocated to these projects as though the money is “free money” that is being used to hire new workers. In reality, they should be comparing the claimed benefits against what would have happened, if they had left the tax money in the economy for all businesses to begin with.
Taxation, while necessary, always burdens economic growth. Politicians who tax some businesses in order to redistribute the money to other businesses and industries, are playing king with the economy and are impairing free enterprise. This is why many economists and citizens want to stop hand-outs to Big Businesses or so-called “corporate welfare.” (I don’t use the term “corporate welfare” because “welfare” usually means that the recipient needs the help. In this case, the recipient doesn’t need it.) That is why I call these Forced Taxpayer Investments, and I oppose them, including the Formula One racetrack scheme here in Travis County.
There is no such thing as an almost-free market.