Ohio tax policies create sprawl & pit cities against each other

Common sense would tell you that when cities fight to give corporations the best deal, someone will pay, and yet, we needed a study to prove the obvious.

From the Cleveland Plain Dealer:

Ohio’s tax abatement programs, designed to keep businesses in the state, have failed Cleveland residents and those in the inner-ring suburbs by moving jobs away from the urban core to more affluent areas, said a report released Thursday.

Paid to Sprawl: Subsidized Job Flight from Cleveland and Cincinnati” found that 164 companies were given lucrative property tax breaks as they relocated facilities around within both metro areas.

The study by Washington, D.C.-based Good Jobs First, a nonprofit research center, said jobs were moved from areas that were more racially diverse, had higher concentrations of poverty and more plant closing to areas that were more affluent and often in the far reaches of the county.

The subsidized relocations affected 14,500 workers “and by many measures fueled suburban sprawl, especially in the Cleveland region,” the report said.

Greg LeRoy, one of the study’s authors and executive director of Good Jobs First, said 80 percent of the moves were to locations that had no access to public transportation. The group looked at 152 tax abatements that totaled about $29.7 million. Each abatement averaged $317,000 for each Cleveland facility and $223,00 per facility in Cincinnati. The relocations occurred between 1996 and 2005, but the group said most of these trends still continue.

To remedy some of the problems, Good Jobs First recommends:

• Governmental bodies adopt anti-poaching policies designed to discourage companies, municipalities or counties from competing with each other

• Revenue-sharing packages that include provisions that companies must move near public transportation

• A public records requirement that the costs and benefits of all economic deals be available online

Ken Montlack of the First Suburbs Consortium, who attended a press conference at Trinity Commons Thursday in which LeRoy unveiled the report, said little was new in the report, but the information was still valuable because it highlighted a longstanding problem.

He said he was going to lobby his group to recommend that a no-poaching agreement be a mandatory requirement of tapping a newly created $100 million economic development fund in Cuyahoga County.

“Let’s put some muscle in it,” Montlack said.

via Ohio’s tax policies encouraged sprawl and competition among communities to lure companies, report finds | cleveland.com.

The recommendations of this report won’t solve a damn thing. Companies will still look to shop for the most lucrative breaks, across state lines as well. It’s time for a total ban on all tax break ability except from the federal government based on broad goals such as energy independence.

Tax rate adjustments of any kind create winners and losers, and can create economic advantages, tilting the playing field. Examples of good types of tax breaks that help achieve national goals:

  • A walk-to-work tax break which would help create walkable communities. This cuts dependence on foreign energy, increases healthy lifestyles which, in turn, cut medical costs and reduce the cost of infrastructure repair.
  • Energy efficient buildings tax credits encourage conservation of resources, and reduce the impact of greenhouse gases on the environment.
  • Historic renovation and adaptive reuse of old buildings: cuts down the filling of landfills and preserves heritage.
  • Alternative green energy generation: credits for solar, wind and geothermal energy encourage renewable clean energy, cutting dependence on foreign energy.

Giving abatements willy nilly for job creation, job retention is capricious in nature and adds no long-term value to communities, since the moment they expire, there is no reason for the company not to move again- looking for a better deal. In Dayton we just gave a 30-year tax break to GE to research and make jet engines. Considering, the jet engine may be a thing of the past in 30 years, what will we get in year 31?

The “Paid to Sprawl” report does point to the economic divide between the winners and the losers in these tax break boondoggles. If there is one thing tax breaks have been proven to do, is make it so the rich pay less as a proportion of their income than the poor. The divide has continued to widen to a point where eventually, we will be faced with the same issues we’ve seen in the “Arab Spring” and the republic will fall. History has shown us this through the years.

We are living in an economy that is on the verge of collapse, while politicians point fingers about raising the debt ceiling. Our tax code is a mess. We’ve got more people in prison than any other “free society” in the world. Our schools are failing, out cities fighting to provide basic services, a health care system that’s six times more expensive than any other in the world- yet has higher infant mortality rates than a third world banana republic.

It’s time for a total overhaul of how government does business and how we choose our elected “representatives” who’ve given us this mess.

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3 Responses

  1. David Sparks July 9, 2011 / 3:26 pm
    Good piece. Unfortunately, most people I talk to believe that a total collapse will be the only way out into a different world, mostly because the institution of government is largely gridlocked by the same corruption and/or amorality that sustains it.

    Brilliant or Bozo? Thumb up 3 Thumb down 1

  2. truddick July 9, 2011 / 3:45 pm
    The only way to fix this problem is to do it at the national level.  That means a constitutional amendment that says that no government may set a special tax rate for any individual citizen or corporation.  (If you word it that way, you have the added benefit of reversing that Scalia court decision that corporations are citizens.  Yeesh!)

    Brilliant or Bozo? Thumb up 3 Thumb down 6

  3. Ice Bandit July 10, 2011 / 9:50 am
    The only way to fix this problem is to do it at the national level.  That means a constitutional amendment that says that no government may set a special tax rate for any individual citizen or corporation. (Truddick)
     
    …great idea truddick. It’s called the Fair Tax and it’s logic and fairness have created a tsunami of interest in a citizenry which sees the futility of the status-quo. Why, dear truddick, should the localities that are utilizing tax manipulation successfully in attracting business wish to change? Notice that these same locales are gaining in population (Ohio is losing two US House seats in the next presidential election) prestige and political clout. But rather than a constitutional amendment that has as much chance of passing as the Old Bandito has with getting a date with Jessica Alba, what is needed is the repeal of the income-tax enabling 16th amendment. It’s the Old Bandito’s guess that even if all things were equal, Ohio would still rate at the bottom of business-location  desirability. Perhaps it’s a vestige of Ohio’s glory days, but there is still within the Buckeye State too great a culture of business-hostility and punitive taxation (as displayed daily on Esrati.com) for Ohio to revive itself expeditiously. And as a sidebar, the Supreme Court defining corporations as citizens, with the right to spend money any they please, goes back incrementally to the Dartmouth College case (1819) with the high court officially declaring such in the case of Santa Clara County v. Southern Pacific Railway (1886), so the Scalia declaration is consistent with SCOTUS decisions from the country’s founding…

    Smackdown!. What do you think? Thumb up 8 Thumb down 3

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