State Subsidies

I was reading about corporate welfare at the Ludwig von Mises Institute. Christopher Westley states and I quote ,’ As hard as it may be for the arrogant state development community to believe, the vast majority of economic growth that occurred in the United States was actually coordinated without any such central planning boards.’

I had made a similar case in point against state subsidy on my blog albeit without the research. San Francisco and New York did not become great cities because of tax subsidies.

State Corporate Income Tax is based on a three factor formula, which affects the plant, workforce and point-of-sales locations. In today’s global work environment, workforce and point of sales locations might not be a concern for Internet businesses. The plant might also be a mute point. So, the question is how do we go past this antiquated concept of attracting high growth companies?

There was a study conducted by a former Michigan governor that concluded that the best long-term strategy for attracting business was to maintain a simple, low-tax and low-regulatory business environment.

Even a country such as, Albania introduced a flat tax rate of 10% to attract international investors. So, why are we not doing this? This is tantamount to saying, tax anything that is productive and efficient. Make them pay for being smart to compensate for the rest who might not be.