Florida Governor Ron DeSantis and the state’s Republican-controlled legislature are taking some heat for revoking Disney’s special carve-out privileges. As Politico explains:
The more high-profile proposal signed by DeSantis, FL SB 4-C, calls for eliminating six special districts in Florida, including the Reedy Creek Improvement District that has since the 1960s granted Disney privileges like the ability to build its own structures without seeking approval from a local planning commission and collect taxes and issue bonds.
We’ll let others debate the pros and cons of such a revocation, while we ask the more fundamental policy question: Should states be offering company-specific tax breaks and other perks to relocate or set up shop in the state in the first place?
As far as we know, virtually all of the states, whether bright red or deep blue, at times make such offers.
Bright red Texas certainly has. Purple Wisconsin did it in 2017 to attract Foxconn, the Taiwanese electronics supplier. At $3 billion, the Foxconn lure was “one of the largest tax incentive packages ever approved for a private company,” according to NPR.
Foxconn accepted but things didn’t go as planned—or hoped. By April 2021, Foxconn and the state had renegotiated a much smaller deal.
Of course, if you were a long-time, thriving Wisconsin business with hundreds of employees in 2017, you might have felt somewhat disabused by the agreement. Where was your $3 billion state tax break?
In addition, several states have showered left-leaning Hollywood filmmakers with tax breaks for making movies in the state. And, of course, cities are often willing to pony up lots of tax breaks and other perks for mega-wealthy sports-franchise owners if they will build a stadium in the city.
We understand why states and cities make such offers, and they will likely continue doing so. But a better approach would be to create a stable, business-friendly tax and regulatory environment that attracts all types of companies to a state for sound business and economic reasons.
One of Walmart’s best marketing slogans was “Always low prices. Always.” Consumers didn’t have to do a lot of comparison shopping because they felt that, on balance, they would be getting the lowest price for most or all of their purchases.
Similarly, states wanting to attract businesses should consider this marketing slogan: “Always low taxes. Always.” Businesses might just embrace that approach and move to the state for the right reasons. Individuals, too.
Originally published by Institute for Policy Innovation. Republished with permission.