Wednesday, September 28, 2011

The Snooki Tax Credit

Considering the brouhaha over tax credits extended to "The Jersey Shore", it seems that many of the arguments miss the larger point: the conclusive evidence that left wing tax policies destroy an economy.

Of course, many on the left know this: many of the so-called "job creation" bills, state and national, provide some sort of tax preference designed to favor a particular industry or activity. It’s amusing, then, to see prominent leftists passionately decry "tax cuts for millionaires" while, at the very same time, proposing ... tax cuts for millionaires. But, then again, consistency is the hobgoblin of small minds, no?

Film production companies demonstrate, in real time, the destructive nature of leftist economics and the hypocrisy of those who support them.

Film projects are, by their very nature, highly mobile. If one wishes to film in a court house, one can do so as easily in Newark as in Somerville; as easily in MA or PA as in NJ. And, as Paul Mulshine pointed out, the benefits to local economies of those projects can be substantial. Seaside Heights businesses benefitted from the rooms rented, the meals eaten, and the money spent by the production crew of the Jersey Shore, never mind the increase in tourist revenue.

Put simply, tax cuts work.

Like every other business, film production is all about the bottom line. While one’s production crew needs to be fed and housed, other costs vary. As herein applicable, taxes.

NJ’s business tax rates are among the most absurd in the nation, having been doubled under the McGreevey administration, and supplemented under the Codey/Corzine regime, all in the name of "fairness" and making business pay its "fair share". A film company, deciding where to shoot, must choose between NJ’s idiotically high taxes, and more reasonable rate elsewhere, which may be zero. No points for guessing how those decisions usually come out.

The Legislature – last I looked, controlled by precisely the same Dems who never tire of demanding that "rich" folks pay ever more – responded to the threat from film industry millionaires to take their business elsewhere by granting tax credits. Enter – alas – Snooki.

So, consider the Dems’ position: while screaming that Christie refuses to tax ALL millionaires, they fight to provide tax relief for SOME millionaires, because this latter group, being easily mobile, will react immediately to the Dems’ idiotic economic policies by vamoosing.

But the same concerns which motivate the producer of a televisions series to seek less graspy jurisdictions apply equally to other businesses as well. Just not so quickly and not so publicly.

Dem economic policy is all about the short term, defined as next November. If we slap a huge tax on company A, with a factory here in NJ, it will, almost certainly, produce more revenue. Today. Which enables the Dems to hand out goodies – paid for with other people’s money – to their loyal constituencies. Today. Just in time for the election.

But when the time comes to decide whether to replace or expand that factory, the business undertakes precisely the same cost-benefit analysis that film production companies do. And as NJ is among the greediest jurisdictions in the nation, that calculus works against us. Not today; probably not tomorrow. But, over time, the inevitable consequence of envy-based, redistributionist policies is economic catastrophe.

Sure, it’s easy to demagogue the issue; Assembly leftists specialize in it. "Christie and the Republicans are permitting those evil folks who succeeded to actually KEEP some of the money they earned! How dare they?!?" But even the slightest rational thought – granted, that’s rare on the left – leads inexorably to the conclusion that if the "rich" guys who make movies will make those movies in low tax jurisdictions, the "rich" guys who make cars, drugs, etc., will do precisely the same thing. You can produce as many studies from Obama-donating Princeton professors, contending that taxes don’t matter, as you wish; the evidence from the film industry could not be any clearer. High taxes drive away business, to the great impoverishment of the polity.

We made a reciprocal mistake with public employees: politicians, seeking short term electoral gain, promised present employees unaffordable future benefits, which exploded long after the pols who dug us into this hole had moved on. Similarly, short sighted tax policy – enacted by envycrats with an eye on the next election and who count upon an economically illiterate electorate – gradually undercuts the economy. The film industry simply demonstrates, on an accelerated time scale, the effect of leftist economic policy. Simply put, if you tax them, they will leave.

The health of the economy – state or national – depends upon welcoming investment, attracting businesses, and encouraging them to stay, not by playing favorites and granting special, "targeted" tax benefits to favored or high visibility businesses, and certainly not by reviling them for their failure to pay their "fair share".

Instead of this credit for that company, an abatement here, or an "enterprise zone" there, NJ’s policy should be simple: eliminate business taxes entirely, pare back regulations (e.g. repealing the Highlands law), and turn the entire state into an enterprise zone. Prosperity results when liberty obtains and everyone will have the opportunity to participate therein, and to go as far as their talent and effort will take them.