Wednesday, October 12, 2016

"Economic Development" -- A Debate on Corporate Welfare in Texas


"Dishonest scales are an abomination to the Lord,
But a just weight is His delight."
Proverbs 11:1

This afternoon TPPF hosted "Economic Development: A Debate on Corporate Welfare in Texas."  Speakers included Richard Corcoran (incoming speaker of the Florida House of Representatives), Senator Craig Estes, Bill Hammond of the Texas Association of Businesses, and Dean Stansel of the SMU Economics department.  We'll present our thoughts thematically rather than chronologically.

Term Limits:

During his opening remarks, Corcoran made an offhand comment about how eliminating various corporate welfare funds in Florida (including their equivalent of the enterprise fund) only came about because of the churn term limits forced upon their legislature.  The short version is that as the RINO's were forced to retire, they were replaced by conservatives until a critical mass was finally achieved in the past few years.  There's a lesson in there Texas would be wise to learn.

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Texas' "Uncompetitive" Property Tax system and "abatements":

Hammond argued that property tax "abatements" by school districts are essential for "large capital investment" because Texas' property tax system is, in the words of Bill Hammond himself, "uncompetitive."  Hammond was essentially arguing that, because high local property tax burdens eliminate the return on business investment, local jurisdictions (esp. school districts) need to be able to "abate" those taxes.  Hammond cited Louisiana as some sort of vague example of a state that does this successfully.

Of course, Hammond's newfound chagrin for Texas' "uncompetitive" property tax system was amusing to anyone who followed the last session of the Texas legislature.  Last session, alongside Team Straus, Hammond led an effort to obstruct Lt. Governor Patrick's property tax reform efforts. At the time, rather than fixing the property tax system, Hammond et. al. pushed a dopey scheme "alternative plan" to instead cut a sales tax nobody is complaining about.

Thankfully, several other panelists and audience members pointed out that the solution to an "uncompetitive" property tax system was to fix it for everyone, not create new carve outs for politically connected special interests.

In a separate piece of semi-related good news, Hammond announced he's leaving TAB at the end of the year; we'll help him pack.

One final note: Apparently, Hammond was once a Dubya gubernatorial appointee to the workforce commission, which means he's a Karl Rove crony...boy does that explain a lot.

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Sen. Craig Estes:

Senator Estes appeared genuinely torn.  We kept an eye on his body language throughout and he looked like...a guy legitimately wrestling with the issue.  A cynic might argue that he's an incumbent reading the writing on the wall in Dan Patrick's Senate.  An optimist could say that he's recently gotten wise to the issue.  Either way, we always welcome movement in our direction and encourage Senator Estes to discuss the issue with Konni Burton.

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Impact on Florida:

Corcoran pointed out that no company, or professional sports team, or film production outfit that threatened to leave Florida following their elimination of various corporate welfare programs has actually followed through and done so.

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Bottom Line: Corporate welfare leads to the politically directed allocation of capital, which serves no positive economic purpose but undermines credibility for other aspects of economic liberty; Texas cannot eliminate all of it fast enough.

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