Offering tax holidays to businesses seems kind of like a “race to the bottom,” where governments compete with each other to attract businesses by offering financial incentives. All else equal, the government that “wins” is the one that gives up the most in the form of tax subsidies.

All else equal, the business will locate in the area which will provide the greatest financial incentives. If no government offered financial incentives, businesses would make decisions such as where to build a new factory based on how the amount of profit the company will realize by building the factory in proposed locations. With incentives such as tax holidays, a business will locate in an area where it will make less money from operations as long as it can make up the difference in tax subsidies. Thus, these tax subsidies distort market forces and practically guarantee inefficient economic decisions.

As to how a normal citizen can stay on top of local politics, I don’t know of a good central source. City council meetings are a good place to start, but often there are organizations of private citizens that meet to discuss items posted on the city council agenda and decide which ones to support. My brother-in-law has been quite involved, and he is the one who invited me to the meeting I mentioned in the post. Otherwise I wouldn’t have known of it.

Despite the fact that local politics doesn’t get much media coverage, many of the most egregious government abuses are at the local level. Kick-backs, cartels, fraud, and corruption are at least as common at the city and county level as they are at the state and federal level. Furthermore, local governments have quite a bit of power; they control many day-to-day issues like property taxes, zoning, business licensing, construction standards, and so on.

Here are a few examples I pulled from the Institute for Justice website:

“On December 1, 2009, the Lake Elmo City Council declared that it would begin enforcing a law that forbids farmers from selling products from their own land unless they were grown inside city limits.”

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“The city of Dallas, Texas, changed its laws in 2008 to ban virtually all business window signage.”

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“Effective in October 2008, tour guides in Philadelphia will be subject to hundreds of dollars in fines for engaging in unauthorized talking. A law enacted April 2008 will make it illegal for anyone to give a tour of much of the city’s downtown area without first getting the government’s permission to speak.”

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“[I]n San Juan County, Wash., … the County council passed a law … at the behest of politically connected brick-and-mortar businesses, [that] required vendors to obtain a government permit and pay $50 per day for the right to earn their living. Were that not bad enough, to obtain the permit, vendors were required to receive the consent of competing brick-and-mortar businesses. In other words, the ordinance gave business owners the right to veto their competition.”

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“Under the [New York City public transportation unions’] influence, the New York City Council from 1994 to 1997 vetoed 98 percent of all new van licenses, keeping competition for commuters to a minimum. And for the lucky few with licenses, arbitrary regulations forbid vans from operating on the same streets as any New York City bus and from picking up passengers except by ‘pre-arrangement.’”

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“The City of Red Wing, Minn., has unconstitutionally turned its local government into a special interest protected from competition. On August 28, 2006, the City Council adopted an ordinance that forces all private commercial trash haulers to use the City incinerator for 10 years, effective January 1, 2007, as a condition of doing business in Red Wing. The incinerator has been burning up taxpayer money since its inception and the ordinance is nothing more than an unconstitutional attempt to prevent the inefficient government boondoggle from facing much-needed competition.”

I was at the same meeting with Quincy and he did indeed speak up. It caught most of the fellas there off guard. It was quite entertaining to see these other guys have a blank stare and no answer to Quincy’s questions which espoused the principles these individuals claimed to have.

Quincy would know this but if you are in the area mentioned, you are free to come drop by when this group meets. It’s an open invite.

Local politics are indeed hard to get into and not all of them are as volatile as the city that Quincy mentions. Usually, you have to attend a council meeting and then try and determine which of the council members thinks somewhat like you do. Also, listening to the public comments and finding individuals that think like you is also a way to get into the rigmaroles of local politics. Heaven knows, everyone has a group that they get together with and the council members or people attending the meeting will be able to tell you.

Nice post. I’m only disappointed that you don’t talk me up since, as of Saturday, I’m trying to work on pride and I now have to solicit others to boast about me.

I find myself wishing that there was a place (I’m sure there is) where I could go to glean local political information in a substantive way. Local politics seems harder to get into for some reason, or just boring. Local politics almost seems analogous to local news; I don’t have time to hear Joe Broadcaster talk about how local citizens are coping with the winter weather. I know there are important political issues locally, but it just doesn’t come across that way.

Love the posts.