03/14/05 — Guest Editorial: Incentives are a way of showing favoritism

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Guest Editorial: Incentives are a way of showing favoritism

Many are the sins committed in the name of economic development. Most of them involve the practice of giving incentives to private companies to locate or expand in North Carolina.

Take the recent instance in Wilson where the city gave money to a private developer to locate a Target store in a new shopping center. The owners of an older center that contains a Wal-Mart are suing, claiming the city is both expressing a preference for one store over another and creating more favorable business conditions for one over another. IBM could make the same claims over the massive funds given to Dell Computers.

But the case that really nails home the unfair practice concerns the state awarding $10 million to a Texas food distributor, Sysco, to build a plant in Johnston County, directly competing with a 120 year-old North Carolina home-grown food distributor, Pate Dawson Co.

The essence of the message is that taxpayers are to become business partners with one company to the exclusion of others. This flies in the face of Article V, Section II of our Constitution that states in very plain language that, “The power of taxation shall be exercised in a just and equitable manner, for public purposes only, and shall never be surrendered, suspended, or contracted away.”

No way is such an exclusionary practice “just and equitable” to those who do not receive the incentives. It is a stretch to claim that giving money to Target, Dell, or Sysco is a public purpose. But the problem is compounded when you consider that in each instance such an agreement is put to writing, guaranteeing public money in exchange for job creation. That's a contract and our officials have violated the Constitution in contracting away the power of taxation.

Despite the legalities, there is the inherent message to those companies that were started here, in many instances through financial sacrifices from founders, created jobs, contributed to community and statewide causes, and paid taxes through many years. The message to them is that what they have contributed to their communities and the state doesn't matter. We already have them. We don’t care about their businesses or its continued success.

And what of these new companies with whom the taxpayers become partners? While it can be expected that they will generate new revenues, it must also be a surety that they will be taking some business away from those already doing business here. So we are giving tax dollars to people who are going to reduce tax revenues from firms currently paying taxes.

Not only is this patently unfair, it is bad business. The sins omitted and committed are too grievous to continue these incentives. Government should not be anyone’s corporate business partner. Neither should taxpayers.


Tom Campbell is former assistant North Carolina state treasurer and host of “NC SPIN,” a weekly television discussion of current issues.

Published in Editorials on March 14, 2005 9:06 AM