Mon, 31 Mar 2003

Tax exempt bonds

A Toronto company wants tax-exempt financing from the St. Lawrence County Industrial Development Agency to help reopen the former Zinc Corporation of America mines.

So goes the news report. It's unfortunate, of course, that the supply of zinc has gotten so much larger than the demand for it that the mines in St. Lawrence County are no longer profitable. Sad for the workers. Good, though, for anybody who makes anything that has zinc in it.

Should St. Lawrence County make the bonds tax exempt? Probably not, although they probably will. As the Watertown Daily Times article points out, the county incurs no financial liability from approving tax-exempt status, and would not have to pay anything if the company defaults on its debt or goes bankrupt. From the view of the legislature, the only visible cost is their time spent approving the tax-free status. You bet they'll approve it

Unfortunately, whenever a government meddles in the formerly-free market to give one company an advantage over another company, they are engaging in central planning. They are saying that that company's jobs are more important than other company's jobs. By reducing one company's taxes, they are forcing those taxes to be made up by everyone else. It's as if they took a few cents from every tax-payer and put it in the new company's pocket.

You see this all the time, in all sorts of flavors. Legislatures give tax breaks many more times than they would get away with direct subsidies. Taxpayers understand when money they paid flows to a private company. They don't understand that the very same thing happens when a company's cost is reduced by fiddling with taxes. Well, you read it here, so now you have no more excuses.

No welfare for the rich!

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