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Monday, March 30, 2009

Incentives to Business - Thoughts on ballot issue 1A

As a voter (and) a rational individual it appears that Ballot Issue 1A is an open pocket-book for the City of Colorado Springs government. The ballot issue proposes that tax monies be put aside for Economic Development. My first concern is that proponents of this issue state it will not be an increase to taxpayer, rather a "continuation" of an existing tax used on the development of Powers Boulevard in eastern Colorado Springs. I would think that the "conservative" City Government would look to providing a tax break during a mild State recession. I guess the local government and groups supporting this issue do not realize that a smaller local economy must result in a smaller local government.

My biggest concern is how will the city council earmark these funds. It is not the role of government to provide incentives to businesses looking to relocate to Colorado Springs. For local government to allocate taxpayer money as an incentive to "winning" business who chooses Colorado Springs is a "market failure". It is also unfair to exisiting business as they are not on a level playing field. The need is for businesses that want to be in Colorado Springs not ones that are bribed to make a decision. A free market will bring the jobs that people want and need.

The Colorado Springs market has alot more to offer than say - Detroit or Buffalo. We offer great weather, low property tax, outdoor activities and an educated workforce. An alternative would be to offer tax breaks for new business that build, renovate properties, or purchase new equipment or machinery. This does not come directly from the taxpayer and is a little less "transparent" to voters. My problem is this is also market failure. I hope that the Colorado Springs community desire that new "primary jobs" in our economy be provided by businesses that wants to be here - not paid to come into town.

Vote - NO on Colorado Springs Ballot Issue- 1A.

I agree with your primary analysis but your semantics are killing me. It's inaccurate to use "market failure" to describe a situation where the government distorts market signals. This is "government failure". It's important to keep the two distinguished. I see even professional economists making this mistake left and right all over the blogs.
I'm with Tim. I'm also with Chris. Chris, in my view, correctly identifies local government policy that is inefficient. Inefficient government policy and government actions should be identified as GOVERNMENT FAILURE.
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