The federal government's “Chips and Science Act,” which will throw hundreds of billions of dollars of taxpayer money at private computer chip manufacturers over the next few years, is up, rolling and creating something of a taxpayer-subsidy arms race at the state level.
As the Tax Foundation reports, state governments are opening their coffers wide to encourage chip makers to locate operations in their state. The reason: jobs and tax revenue, of course (but really, it's all about the press releases politicians issue whenever they give a private company access to the public till).
As the Tax Foundation notes:
At least 12 states have recently enacted new tax incentives, expanded existing tax incentives, or provided new economic development funding for semiconductor investments. The states include Arizona, California, Colorado, Florida, Idaho, Illinois, Kansas, New York, Ohio, Oregon, Pennsylvania, and Texas.
Yes, yes, it's a veritable corporate welfare buffet. But there are a few caveats on the menu:
…there is no guarantee that states will see their semiconductor incentives bear fruit. For instance, many of the provisions are temporary. For some manufacturers, the expiration of an incentive could mean higher taxes in the future and could serve as a disincentive to invest in the state in the first place. For other semiconductor manufacturers, the incentives may be just the boost they need to begin or continue operations in a certain location—though past experience casts doubt on the ability of incentives to deliver. Nevertheless, a narrowly targeted tax incentive distorts business decisions and is not the best use of limited state government funds that could instead be used for broad, pro-growth improvements to the overall tax system. [emphasis added]
Making a tax system that is broad, fair, and simple is beyond the (admittedly limited) ability of many local pols. Like their congressional cousins, they look at the tax code as a type of favor factory from which special presents may be manufactured to benefit the few at the expense of the many.
And really, which state legislator doesn't want to have their picture taken in a hard hat breaking ground on a shiny new facility in their district? It's going right on the cover of the campaign website to prove Rep. X is working for ”you.”
When the reality is the state is extracting tax revenue from Peter to give to Paul while pretending that Peter is the real winner in the exchange.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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