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2/24/2009
Burri to liberals: Incentives do matter
"...this budget recognizes that when the cost of cigarettes goes up, fewer teenagers start smoking. The research there is clear…I am proposing an additional 75 cent tax on a pack of cigarettes. I hope that’s a tax we don’t collect for long. All of my career, I have been fighting big tobacco, and the purpose here is to stop kids from smoking, to help people quit, to improve public health and to drive down our state’s health care costs."
Blink hard. Just to make sure your vision is clear. Then read it again. Yes, that was Governor Jim Doyle, in his budget address, displaying a clear understanding of Supply and Demand. The higher the price of a good, the lower the demand. Fewer people will buy it.
It’s not the first time a liberal Democrat has done this. Lieutenant Governor Barbara Lawton continues to lobby in favor of the Hollywood tax credit, aimed at luring movie producers to Wisconsin. Governor Doyle eliminates that credit in his budget bill.
…Lt. Gov. Barbara Lawton even lashed out at Doyle, saying killing the year-old program didn't make sense.
It's no surprise that projects like "Nephilim" would start to look elsewhere should the incentives go away, Lawton and others said Thursday.
…"Without those incentives, jobs will be lost and a growth industry shut down in Wisconsin," Lawton said. The lower the price of a good, the higher the demand. More people will buy it.
Amen, sister.
Now, it doesn’t appear that luring the Johnny Depp flick “Public Enemies” to Wisconsin with that very tax credit did all that much for us. Still, the basic fact remains: give them incentives, and they’ll come.
Conversely, as Governor Doyle has so sagely pointed out, give them disincentives, and they won’t.
How, then, to explain the Governor’s stance on other taxes? Taxes on business, especially? Taxes on software, taxes on profits. Taxes on gas and oil. Taxes on hospital beds. Taxes, taxes, taxes.
If we tax cigarettes, people will stop smoking!
If we tax movies, Hollywood will stop coming!
If we tax business…
How does Governor Doyle not make the same leap? How does he – how does anyone who thinks like him – not make this connection?
Want to stimulate the economy? Eliminate the corporate income tax. Temporarily, even. Use the same logic you’re using on cigarettes, Governor!
But he won’t. Even if he wanted to, his political allies wouldn’t let him. To them, the Laws of Supply and Demand aren’t laws. They aren’t the building blocks of economics. They’re just talking points, convenient to wheel out when it suits a political position, easy to ignore the rest of the time.
And…why? Why do liberals insist on ignoring the connection between incentives and success?
Your buddy says to you: hey, let’s go into this business together. We’ll work hard, and we’ll make millions! Or: hey, let’s go into this business together. We’ll work hard, and we might scrape by for a dozen years before finally declaring bankruptcy!
In the former, you'd say yes. In the latter, you'd say no. Incentives matter.
When it comes to business – when it comes to people making good money – liberals and Democrats ignore Supply and Demand.
Why? Could be jealousy. Good old fashioned class envy. Or economic xenophobia. Or a pragmatic political choice to stoke the jealousy and xenophobia of their constituent bases. Something like that.
It’s not out of logic. Reason, either – at least, not economic reason. Their own statements prove they understand economic basics. Sometimes, they simply choose to ignore them.
Lance Burri is a contributor to the Badger Blog Alliance
COMMENTS
Sort of hard to believe that Burri and Lohman are on the same page here. YES we need ZERO corporate taxes, because these taxes (plus all of the "avoidance" costs of attornies, CPAs and accountants) are all added to the price of the product and we consumers pay for them at the cash register. ZERO corporate taxes would make companies more competitive with foreign products and add jobs in the US. (Though I agree with the logic of cigarette taxes.)
But where I disagree with Burri and conservatives is in what causes high taxes in the first place, and it's our corrupt political system. As long as that remains in place, expect more of the same, regardless of the party in control.
Can you imagine owning a company and one of your employees is taking money from a vendor on the side, and giving corporate assets in return? Now add a second employee and a second vendor. And a third employee and forth. How long is that company going to stay viable?
That's exactly what's happening in state and federal politics and only public funding of campaigns will stop it. There are only two forms of campaign funding, public and private, and at $5 per taxpayer per year I'll take the former.
Jack Lohman
MoneyedPoliticians.net
Jack Lohman (Tue Feb 24 08:13:53 2009)
Jack, I agree that our corrupt political system keeps taxes high. And do you know who started this mess, at least in the magnitude we see it today? FDR!
He started messing with the proper role of government (protection of citizens), and began re-distributing the wealth via his multitude of programs. And the lobbyists came a-begging.
What about ELIMINATING most gov't programs? Even most of the "watchdog" branches of the govt don't work (FDA< USDA, etc). All of a sudden, there'd be no gravy train to lobby FOR, and we'd have most of the money we earn back in our own pockets.
emily matthews (Tue Feb 24 15:29:46 2009)
Emily, I am 100% in favor of scrubbing government of its needless and inefficient departments, and freezing hiring and moving all displaced workers to the remaining departments.
I'd even support eliminating the FDA and USDA *IF* 100% of American CEOs were honest and above board and wanted to do the right thing in life.
But they aren't. Some are greedy b*stards that would just as soon put arsenic in your food if it padded their wealth. Thus regulations are needed. Laws are needed. Government is needed, to a limited extent.
And yes, we need honest politicians, but even they are few and far between.
Jack Lohman (Tue Feb 24 16:31:10 2009)
TO Mr. LOhman: Public financing? Ha ha ha. It has to be voluntary and no one will volunteer if they can raise more. Are you suggesting we mandate public financing? There is no problem worth violating the Constitution to solve. We need some Proxmires, willing and able to win on principles, brains, shoe leather, and handshakes. Actions speak louder than words. If you run on public financing and win, others will follow. There is no solution in the law but in our hearts.
TO Mr. Burri: The most cogent diagnosis of Doyle’s psychology. Too bad he won’t ever say why he ignored his economic facts.
timbeau (Tue Feb 24 20:58:38 2009)
Mr. Lohrmann,
Why should there be ZERO Corporate taxes and I, a hard-working independent guy who doesn't enjoy "Corporate" status still have to pay? Bull!
Fair tax - yes, No tax - no way. Not when Corporations come whining to collect handouts like any other welfare sucker when the going gets tough.
No tax? You're kidding, right? Take, take, take for GM, Chrysler, Ford, Citi, AIG, and the list goes on ... but they're not supposed to pay? Spare me.
Lance Burri has it right once again. Mr. Lohrmann, on the other hand, has taken this matter to an illogical extreme which is beyond the pale.
Jeff Riedl (Tue Feb 24 22:23:56 2009)
Jeff, Let’s turn it around 100%. Zero taxes for people and 100% of revenues coming from corporations. Now what have we accomplished? We sure have taught those bastards a lesson, haven’t we?
No, even if we gave them zero write-offs so they wouldn’t have to hire expensive attorneys and CPAs to skirt the taxes, they’d still pass them on to the consumers and we are right back to where we started. But in the process they wouldn’t be able to compete with foreign product and they’d go out of business, taking our jobs with them.
This just doesn’t make any sense at all. We are paying 100% of the taxes anyway, why are we adding all of the administrative BS in the process? Let’s give corporations a break and get all of our jobs back in the US!
We need to get smart. This system we have is total foolishness.
And Tim, we already have public funding of campaigns, we're just paying through the back door and at hundreds of times more than if we paid up front.
Look, politicians are paid by the special interests to spend taxpayer money, and it's costing us $1300 per taxpayer per year in excessive government spending as a result. When I was a business owner we called that a bad deal. We can fund all legislative races for just $5 per taxpayer.
As I said earlier, this system we have is total foolishness.
Jack Lohman (Wed Feb 25 02:37:03 2009)
And Tim, I think that's what you called "ignoring the economic facts."
Jack Lohman (Wed Feb 25 03:01:04 2009)
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