You're watching...
Joe Henchman, Tax Foundation legal and state projects VP, on states offering tax breaks for companies creating jobs, and why this is not a real soluti...
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Dollars in tax breaks for the tech giant to build a data center in Reno it joins a growing list of states offering tax incentives to companies.
The promise to build jobs that's the trade off but my next guest says these deals -- band -- and don't solve a bigger problem Joseph henchman of attacks.
Pounding -- the Tax Foundation joins us now Joseph I guess my first questions here is -- what's wrong with states giving tax breaks to attract business.
World that the issue is not giving name just -- one company as opposed to making it available for everybody.
Because.
If your tax system is so bad do you need to be driving people.
Than there's something wrong with your taxes to -- need to do something about it.
The deal that apple got it it takes away some taxes that probably the state shouldn't be letting in the first place a property tax on.
Business equipment and some sales taxes on inputs but why not take it away from everybody and not just not just one company.
But if you -- -- -- they go somewhere else you know get any taxes that told from a company that promises to create jobs and so on.
That may be true that like I'm I'm here in Chicago which is leading the state -- they the king.
Business tax incentives what they did two years ago as they raise taxes for everybody and then everybody started leaving.
So now they're offering deals for the politically connected companies.
-- years the Chicago Mercantile Exchange for to get them to stay but that's not stopping companies from leaving it's just stopping.
The big name companies from leaving it still doing a lot of long term damage to the Illinois economy.
That's why these deals are not good tax Paulson was so you say ultimately the best thing to do is just fix a broken tax system rather than doing a deal by deal how easy is that.
-- it can be done states like Rhode Island end you talk have and Michigan have done good tax reformers recently that -- accomplish that.
I'm not saying it's easy and certainly more politically.
Popular to do -- How -- economic development office negotiating deals with company by company in issuing press releases and doing ribbon cuttings.
But ultimately that's a that's a dead -- for economic development.
Quite ironically.
Because these these departments doing these deals one by one.
That's not how you create a long term economic growth situation seems like does have it's a kind of a race to the bottom among the states -- -- -- Well there's good -- take good tax competition and bad tax competition.
If I mean if what comes out of this is Nevada learns that it has some features to its tax system -- -- deterrent to attracting new big businesses like apple.
Then maybe that something good will come out of it made -- look to reform it and change that for everybody.
But if all this does is lead to a company after company coming in and saying.
We want the same deal without that -- major change happening then that might be bad and you know there's a lot of companies in Nevada that have been there for decades.
-- I can say is creating jobs gap and and they're not getting them interesting stuff Joseph -- thank you so much for joining us we appreciate it.
All right I'll be taking you through the last hour of trading we got one money manager by the way it says he's.
