Tax Breaks for All

Amazon recently announced plans to build a second headquarters. Almost immediately, local governments across the country began forming plans to entice the company to select their city. Amazon wants cities to get into a bidding war, and the bids will include tax breaks and other financial incentives.

The Chronicle chimed in as a cheerleader for Houston:

We’ve always been deeply skeptical about government officials showering corporations with tax enticements that amount to little more than corporate welfare. But what we have here is not some questionable deal to sweeten the pot for a retailer moving into a shopping strip. Amazon’s new headquarters is a special case, a major new employer whose potential benefit to our city fully justifies offering generous economic development incentives.

I am completely in favor of tax breaks–the more the merrier. But tax breaks that favor one company or industry over another reek of cronyism. Such tax breaks give a competitive advantage to those receiving them. Tax breaks should be extended to all businesses, not just those that promise to make city officials look good.

The paper’s editorial staff recognizes the fact that reduced taxes encourage economic growth. But apparently, encouraging economic growth should be limited to large companies.

Amazon projects that its new headquarters will employ 50,000 people. According to the paper, economic incentives are worth offering to attract that many jobs to the city. But offering such incentives to small businesses won’t create the same headlines or give city officials a high-profile opportunity to pat themselves on the back.

There are thousands of small businesses in Houston, and each would benefit from tax reductions and other economic incentives. If city officials focused on doing what is just, the number of jobs created by those small businesses would be substantially higher than those promised by Amazon.

Rather than drooling over the prospects of landing Amazon’s new headquarters, city officials should be reducing the taxes and regulations that impede small businesses. Of course, that won’t be quite as glamorous as wining and dining Amazon executives. But it will be much more effective in continuing Houston’s vibrant economy.

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