Tax abatements

In Wichita, let’s have economic development for all

February 18, 2009

There’s probably little doubt that offering incentives to companies to move to Wichita results in some that do. And, as we’ve seen, some Wichita companies are adept at inciting rumors they might move or locate new facilities somewhere else in order to gain some advantage or incentive from local or state (or sometimes both) government.

Read the full article →

Wichita Penalizes Companies Through Taxation

December 9, 2008

Five years ago, the City of Wichita granted Big Dog Motorcycles industrial revenue bonds (IRB). The benefit of these bonds is that the company escapes paying property tax (and often sales tax) on the property purchased with the proceeds from the bonds. At the December 2, 2008 meeting of the Wichita City Council, the council [...]

Read the full article →

Downtown Wichita Arena TIF District Still a Bad Idea

December 2, 2008

Say no to expansion of the Center City South Redevelopment tax increment financing (TIF) District. Remarks to be delivered at the December 2, 2008 meeting of the Wichita City Council. Watch the video here. Mr. Mayor, Members of the Council: It is the case the the City of Wichita is proposing to limit this TIF [...]

Read the full article →

Does Kansas Economic Development Work?

September 11, 2008

A commentary by AFP’s Alan Cobb (Yes, but it’s only $1.3 billion) reports that Kansas economic development efforts are not working. Can the same be said about Wichita’s?

Read the full article →

Wichita’s Naysayers Are Saying Yes to Liberty

August 20, 2008

Wichita politicians, newspaper editorial writers, and sometimes just plain folks are fond of bashing those they call the “naysayers,” sometimes known as CAVE people. An example is from a recent Opinion Line Extra in the Wichita Eagle: An acquaintance in another city refers to the anti-everything people as “CAVE” people (Citizens Against Virtually Everything). I [...]

Read the full article →

Kansas Giveaways to Wealthy Homeowners

July 6, 2008

A Wichita Eagle news story (Help with historic houses, July 4, 2008) describes two apparently wealthy College Hill homeowners who plan to benefit from Kansas tax credits. These credits are given to people who own homes that have a historic designation. If you own such a historic house and plan to, for example, replace the [...]

Read the full article →

Wichita and the Old Town Warren Theater Loan

July 1, 2008

Remarks to be delivered to the Wichita City Council, July 1, 2008. Mr. Mayor and members of the Council, we are potentially beginning a journey down a road where there are two classes of businesses in Wichita. There are business owners who seek to earn their profit through market entrepreneurship, that is, by meeting the [...]

Read the full article →

Warren Old Town Wichita Theater: Good Money After Bad?

June 27, 2008

This letter is from my friend Darrell Leffew. Not everyone seems to understand the folly of throwing good money after bad. “Taxpayers are already on the hook” is Wichita city council member Jeff Longwell’s opinion as expressed in a Wichita Eagle article. Mr. Longwell, I realize you weren’t a member of the council when we [...]

Read the full article →

Wichita city manager’s warning is too late

June 18, 2008

Wichita Interim City Manager Ed Flentje issued this warning to the council: “There are in this community much larger businesses with much larger employment who may see this opening as something that will open a door for those businesses to come and say, ‘You’ve done it before, you can do it for us.’”

Dr. Flentje, I hate to break the news to you, but the door is already wide open.

Read the full article →

Tax Abatements in Wichita

June 3, 2008

A few months ago I spoke before this council asking that you not grant a tax abatement. At that time I was told that granting a property tax abatement doesn’t have any impact on City of Wichita spending.

I found this quite remarkable, that new homes and buildings can be built but not consume any additional resources that the city and other local governments supply. If this is truly the case, why should a new development of any type at any location have to pay any property tax at all?

Read the full article →

How to pay for special tax treatment in Wichita

April 15, 2008

Mr. Mayor, members of the city council, I ask that you not vote to approve this request for a tax abatement, and that you cease this practice altogether. Alternatively, I ask that you adopt a practice that will help realize the costs of these actions.

It is no doubt difficult to compete with other states when they offer huge gifts to companies in order to lure them to their state. That’s a problem that needs to be addressed at a different level of government.

Read the full article →

Remarks to Wichita City Council, April 1, 2008

April 1, 2008

By asking for the TIF financing, developers are sending us a signal that without the special tax favor, their project would not be economically feasible. They evidently have judged that it would not be profitable. They must feel that they will not be able to sell or rent at prices that will cover their costs of developing this project.

This means that proceeding with the project is investing capital somewhere other than its most-valued use. We know that because developers build other things in Wichita without receiving a subsidy, and they are able to earn a profit.

Read the full article →

The harmful effects of Wichita’s special tax favors

February 11, 2008

In the past few weeks a handful of companies in Wichita have asked to be exempted from paying property taxes on investments they have made. This week Wichita may decide to grant special tax treatment to a large development in downtown Wichita.

Is it wise for the City of Wichita to grant these special tax favors?

Read the full article →

City of Wichita acknowledges taxes are not good for business

November 8, 2007

Wow! Someone in city hall realizes that a reduction in taxes is good for business, and is reducing taxes in response to that revelation.

Read the full article →

Tax increment financing in Wichita benefits few

February 6, 2007

In Wichita, tax increment financing (TIF) benefits few at the expense of many.

Read the full article →

Wichita City Council and Cessna Aircraft Company Industrial Revenue Bonds

December 12, 2006

I received this letter written to Wichita Mayor Carlos Mayans and members of the Wichita City Council. The author makes excellent points about the harmful effects of special tax treatment for special interests. A better goal would be to work to reduce taxes for all companies and all people. This way, each company and individual can decide how to make best use of their own funds, instead of the Wichita City Council deciding for us. That is, in effect, what tax breaks like this do. It is the government deciding that resources should be allocated in a way different than how the market has decided. Our experience tells us that governments aren’t as smart as markets, and that governments almost always allocate resources inefficiently.

Read the full article →

Maximum taxes means minimum growth

December 9, 2006

Kansas has high taxes. Even worse, the high taxes are high property taxes that stifle capital formation and hold down wages. Two new studies rank Kansas at the bottom of this region when it comes to soaring property taxes. That should not be too surprising since Kansas and Nebraska are the two states that provide their citizens will almost no opportunity to vote on whether or not property taxes should be raised.

Read the full article →

Tax increment financing in Wichita benefits few

August 17, 2006

How does a TIF district work? The Wichita Eagle reported: “A TIF district doesn’t cost local governments any existing tax money. It takes property taxes paid on new construction that would ordinarily go into government coffers and redirects it to the bond holders who are financing the project.”

Read the full article →

Sedgwick County surrenders key tax advantage

August 17, 2006

Spirit Aerosystems CEO Jeff Turner defended the massive spending hike that was used as the primary justification for the county’s 8.8 percent property tax hike in his editorial August 9, 2006. Turner’s support for this increased government spending ignored some important ramifications behind this economically destructive vote.

Read the full article →

Tax increment financing in Iowa

February 6, 2006

Readers of The Voice For Liberty in Wichita are well aware that I believe that when the government provides subsidies to businesses — either in the form of cash payments or preferential tax treatment — we create a corrosive business environment. Government picks winners and losers for political reasons, rather than letting the market decide which companies are doing a good job. Government also spends money inefficiently. Instead of letting the market decide where to best allocate capital, government chooses who receives capital taken from the people through taxation according to the whims of politicians spending other peoples’ money.

Read the full article →

Local economic development in Wichita

November 5, 2005

There is an interesting academic paper titled “The Failures of Economic Development Incentives,” published in Journal of the American Planning Association, and which can be read here: www.planning.org/japa/pdf/04winterecondev.pdf. A few quotes from the study:

Given the weak effects of incentives on the location choices of businesses at the interstate level, state governments and their local governments in the aggregate probably lose far more revenue, by cutting taxes to firms that would have located in that state anyway than they gain from the few firms induced to change location.

Read the full article →

Tax Abatements For All

June 18, 2005

Recently I wrote about the Mississippi Beef Plant (The Mississippi Beef Plant Has a Lesson For Us) and its spectacular costs to the taxpayers of Mississippi. I wondered if there were less spectacular failures that we didn’t know about because they weren’t reported in the news media. Failures in this context could mean a situation where the taxpayers have to make good on a bond or debt that the benefiting company didn’t pay, or it could mean a situation where the company doesn’t default, but fails to deliver on the promised economic development activity.

Read the full article →

Let free markets determine downtown Wichita’s viability

March 12, 2005

If you listen to local Wichita news media, our local politicians, and various community advocates, the desirability of downtown development over other development is accepted as a given. But what people actually do with their own money is different.

Read the full article →

The Real Scandal at City Hall

November 23, 2004

In 2003, local Wichita news media devoted extensive news coverage to two officials in the City of Wichita’s finance department. They were accused of improperly spending between $52,000 and $73,800 on travel. While I don’t condone this waste and I’m glad that our local news media uncovered it, the amount involved is relatively small. Furthermore, the people who wasted this money are no longer in a position to repeat.

The real scandal, however, is the ongoing lack of care exercised when spending our money. Time and time again we read in the newspaper how the mayor or city council members are surprised by facts and circumstances arising after a decision has been made.

Read the full article →