Meanwhile, in local corporate welfare news, my city council is formalizing some handouts to big corporations. Ordinance 16-01-03 received a favorable first reading last night, with the six members of the nine-person council present all voting aye.
Ordinance 16-01-03 formalizes the statutory authority municipalities have to hand out sales and use tax refunds to “the consumer or user of machinery or other tangible personal property in the nature of a capital asset capital asset which is used directly in the manufacturing or processing or fabricating or compounding of personal property which is intended to be sold or leased for final use consumption” [SDCL 10-52-10]. Aberdeen wants to use that authority to hand out sales tax rebates to big projects. Here are the city’s criteria for “big”:
- at least $5 million in new construction property value
- at least $10 million invested in “non-realty capital assets”
- more than $10 million in combined new construction and non-realty capital assets
The refunds will only be able for certain kinds of business ventures:
- manufacturing, processing, fabricating, or compounding
- data processing, hosting, and related services, including payroll services and financial transactions
- research and development in the social sciences, in the humanities, or in the physical, engineering, and life sciences
Ordinance 16-01-03 explicitly excludes the following projects:
- retail
- residential housing or transient lodging
- health care facilities
- establishments not subject to property tax or equivalent taxes measured by gross receipts.
The refund will be 50% of the sales and use tax developers pay for the construction and other investment necessary to build and launch their project.
To translate, if you are regular folks moving to Aberdeen, working hard, buying a house, and feeding your family, you will pay 2% sales tax.
If you are a local weapons instructor looking to build a $500,000 training facility and shooting range, you will pay 2% sales tax.
If you are the biggest soybean processing company in the world with the scratch to build a multi-million-dollar soybean processing facility, you will pay 1% sales tax.
Hmm… the richer you are, the lower your tax rate… isn’t that the definition of a regressive tax? Come on, Aberdeen! I thought you were South Dakota’s beacon of progressivism!
Raising my hackles just a little more about this corporate welfare are the comments city manager Lynn Lander and Aberdeen economic development chief Michael Bockorny made prior to last night’s meeting about the city’s economic development incentive plans:
Lander said this is the first of two economic development incentives he plans to present to the City Council for consideration. He declined to share details of the second incentive.
Bockorny is aware of the second incentive that will be pitched at a later date.
“The next ordinance will be great,” he said. “That will have a really nice impact … more of an immediate impact for a larger number of people” [Elisa Sand, “Aberdeen City Council to Focus on Economic Incentives at Tonight’s Meeting,” Aberdeen American News, 2016.01.11].
Hold on a moment: if I were a city councilor (I’ve thought about it!), and if I were being asked to sacrifice city revenue and make our tax system more regressive for the sake of economic development, I’d want to know all the incentive proposals that the city manager and other parties plan to bring forth. If the city manager puts the sales tax rebate on the table, then hints that he’s holding another incentive plan behind his back, I want to see it! Before I vote for the sales tax rebate, I need to see the other proposal. Maybe the two proposals will work really well together. Maybe the city can only afford one such tax expenditure, and I want to pick the more progressive of the two proposals. Maybe I’ll approve the first proposal, but I need to see the second proposal now so I can say no, send the city manager back to scale the second proposal down, and then be able to say for sure that the city manager really did scale it back for a fair compromise when he brings it to the next meeting.
Whatever the case, this idea of, “Vote for this incentive now, and we’ll tell you about our next super-secret incentive later!” doesn’t pass open-government muster. If Aberdeen is going to spend tax dollars on corporate welfare, we need to see the big picture so we know just how free a ride our leaders want to give the richest among us.
In national corporate welfare news, NOem does not disappoint her owners on HR 1927 http://www.democraticwhip.gov/content/daily-whip-friday-january-8-2016 This is what people of conscience vote for.
She votes YES on this. Damned if I was not surprised on this as she is always voting no on things like Obamacare and anything for the working poor, but here she is with a resounding yes. https://www.govtrack.us/congress/votes/114-2016/h33
Regarding Aberdeen, somewhere in my mind, I cannot help but think that there is tainted water in Aberdeen for them to continue to come up with these get rich welfare schemes that continue in the tradition of the EB5. Where is Joop on this?
Corporate welfare in states continue. John T. shows an entire listing of how much we loose each year with these tax giveaways. Here is about 6 minutes of Nestle telling the world that there is no longer a need for 35 hour weeks, we need more work time not less. Nestle also states that water should be privatized and considered a food. Here is the brave new world that ALEC and the rest of corporate welfare has in mind. By the way, Nestle has been stealing water for the last 25 years in a state that is still in severe drought. https://www.youtube.com/watch?v=Gfy6LL-8sTg
Is this kinda like gosch/schoenbeck logic about two costly proposals?