Tax abatement clawback 101

Used to be that taxes were paid by working people to provide them with services from the government. The services included shared infrastructure like roads and sewers, safety services like police, fire and national defense, public education, immunization- the list goes on. Most of what government spent money on was for the good of all.

Somewhere along the line- government got into the “economic development” business (although building all that infrastructure could be called economic development- it was for the use of everyone- not just one company or person). Government started using tax dollars to “invest” in “jobs” following the line of thought that if there are more jobs- people pay more taxes and we’ve spread the responsibility for supporting all this expense to maintain infrastructure among more people.

Sounds grand. Until you realize that by taking the money from all of us, and giving it to a few of us is exactly what George Orwell warned us of in “Animal Farm,” “All animals are equal, but some animals are more equal than others.”

All of a sudden- big companies, that promise lots of jobs, small companies that promise high-tech jobs, companies that threaten to relocate all became more equal than others- and needed your tax dollars to “persuade” them to stay or grow. This is now what is passed off as “economic development.”

Problem is- the companies that get the money, put their competition at a disadvantage. It’s no longer a fair and level playing field in business. Often times the money flows to the companies that spend the most money on lobbyists, or in campaign donations to the feckless people we elect. Accountability for following through with the promises made in the back rooms is nil- as we’ve seen in Montgomery County, Ohio, for quite some time (the list of failures is too long to cite- search the archives of this site).

In most cases, nothing is done to recover the taxpayers’ money when promises weren’t kept (which has been most of the time). Of course, the politicians who love these deals never personally sign on the line to take responsibility for their actions because it’s not their money, and the CEOs who take the money never sign personally either- because they don’t have to.

Everything was grand in this game as long as tax revenue kept expanding, but now that there has been a prolonged sucking sound in the economy, some communities are getting smart and saying: “Where’s our money?” Summit County in northern Ohio seems to be getting smarter:

Summit County says Chrysler owes it $7.9 million because the auto maker is closing its Twinsburg Stamping Plant this month, violating terms of two tax abatement deals.

The county has asked the U.S. Bankruptcy Court for the Southern District of New York to put its claim for tax reimbursement in a first tier of “preferred creditors” in the bankruptcy — those most likely to get a portion or all of what they are owed.

“We gave them enormous tax breaks,” said Councilman Pete Crossland. “The county is arguing it’s a primary obligation to pay your taxes.”

via Summit County wants Chrysler to repay $7.9 million in tax abatements | cleveland.com.

Call it clawback, call it a return on the investment, call it an acknowledgment of accountability, call it honest government- call it anything you want- but, tax dollars aren’t supposed to provide venture capital, that’s what Wall Street was supposed to do.

If you want to call something socialist- which is a severe twisting of the word by morons talk show hosts in this country, this “economic development” spending would qualify perfectly using the “radical right” definition. It takes from all of us, but gives to a few. “All animals are equal, but some are more equal than others.”

Kudos to Summit County.

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