Voice For Liberty

Tag: Subsidy

  • No Kansas subsidy to Northern Flyer

    When it comes to government money, there’s no shortage of people who have ideas on how to spend it. One group that has grand ideas of how government should spend your money is the Northern Flyer Alliance. This group promotes passenger train service in our area. Currently they’re promoting extension of rail service from Oklahoma City to Wichita.

    The problem with this group, as alluded to above, is that they seek to accomplish their goal by using government. As reported in the Wichita Eagle (Group seeks support for train service through Wichita), “The director of a group seeking expanded passenger rail service through Wichita today asked City Council members to pass a resolution urging the state to include in its upcoming transportation plan a new Amtrak line stretching from Oklahoma City to Wichita and on to Kansas City.”

    So this group is asking Wichita (and many other towns and cities) to apply pressure to the State of Kansas to subsidize this rail line. This group is another example of political entrepreneurship in action. Instead of practicing market entrepreneurship — that’s where you develop and deliver services and products that people actually want enough to pay for — this group seeks to accomplish its goals by influencing politicians and bureaucrats. They were successful in Oklahoma.

    If we want passenger train service that is truly successful, this group should work to raise private capital rather than seeking government subsidy. This is the only way we’ll know whether this train service is something that truly adds value, or whether it is just another “amenity” the government provides by taxing one person to subsidize someone else.

  • End Taxpayer-Funded Competition Between the States

    A Wichita Eagle story (Development speaker touts power of cash) reports on an economic incentive expert’s evaluation of our state’s effort.

    (It’s revealing to learn that an accounting firm has someone with the title “regional leader of credits and incentives,” whose duty, evidently, it is to help companies figure out which state’s incentives are most valuable. Actually, since the title is “leader” there’s probably a whole department of people doing this.)

    The problem with Kansas, according to this speaker, is that we grant tax credits to companies instead of outright cash. That puts our state at a competitive advantage compared to states that are willing to write checks upfront.

    The subsidies offered can be staggering. It’s estimated that a Mercedez-Benz plant in Alabama cost that state over $150,000 per job created.

    We should stop this competition among the states based on their willingness to spend taxpayer money to lure companies. As it is unlikely that any state will be willing to unilaterally stop this on their own, we need legislation at the federal level that will end this tremendous transfer of taxpayer funds to a few select companies.

    Then, states can start competing on things that really matter, like a lower tax climate for everyone.

  • Bailouts National and Local

    A post at the Wichita Eagle Editorial blog titled Either way, taxpayers will pay for failing GM illustrates how when government and business become highly intertwined, a self-sustaining behemoth is created that can’t be slain.

    We say an example of this locally this year in Wichita, when a taxpayer subsidy to a development turned out to be underperforming. The solution? Pump more taxpayer money into a failing project. See Wichita and the Old Town Warren Theater Loan.

  • What? Wichita’s Air Service Subsidy Isn’t Working?

    Recently a travel and tourism expert visited Wichita and said (and I hesitate to repeat his exact words on this family-oriented blog) “Your air service sucks.”

    (See Tourism expert has frank tips for Kansas.)

    I’m more than a little distressed to hear that. Right now we spend $6.5 million per year in subsidy to low-cost airlines in order to reduce airfares and improve service to and from Wichita. Is this subsidy not working?

  • Wichita Mayor Carl Brewer’s Reformulated TIF Plan Still a Bad Idea

    Today the Wichita City Council holds a special meeting to consider a reformulated plan to provide tax increment financing (TIF) for the area surrounding the downtown Wichita arena. It’s still a bad idea.

    It appears there are two major changes in the new plan. First, the TIF district is smaller. Second, spending on the district would be 70 percent of the new property taxes — the “increment” — instead of 100 percent.

    Why is this plan a bad idea? Why, you may be asking, aren’t I in favor of development and progress in downtown?

    To me, there’s a difference between entrepreneurs working in markets and government centralized planning. That’s one of the reasons why I oppose this TIF district. It represents government making plans for us, rather than people deciding themselves what they want. It’s the difference between political entrepreneurs — who work to please elected officials — and market entrepreneurs — who work to please customers.

    If it turns out that when people express their preferences freely that they don’t really want much downtown development, that’s okay with me. I, for one, do not feel that I have the superior knowledge needed to tell people where they should go for fun and entertainment. I’d rather let people decide themselves.

    I’m not willing to use the blunt tool of government to direct people and their money to where I think it should go. I wouldn’t do that even if I was convinced I was right.

    But there are people in Wichita who don’t share my view of free people trading freely in free markets. Mayor Carl Brewer and several city council members — Sharon Fearey and Lavonta Williams being most prominent among them — and quasi-governmental organizations such as the Wichita Downtown Development Corporation feel differently. They feel that they know better than Wichitans do where development should be happening, and they’re willing to use the tools of government to force their vision upon you.

    This is what’s happening at this time. This is why Wichitans need to oppose this TIF district.

    Other article about TIF districts in Wichita: Do Wichita TIF Districts Create Value?, Downtown Wichita Arena TIF District, Wichita City Council’s Misunderstanding of Tax Increment Financing, Tax Increment Financing in Wichita Benefits Few, Tiff over Wichita TIFs, and Wichita City Manager’s Warning is Too Late.

  • City Council divvies up tax dollars for the arts

    A Wichita Eagle news story today tells how City Council divvies up tax dollars for the arts.

    Can you imagine sitting through these meetings with people like Joan Cole and other members of the Arts Council as they decide who gets — and who doesn’t get — government largesse?

    I imagine that these people actually think they have a heightened vision of what Wichitans should experience for their art and culture.

    Why not let ordinary Wichitans decide what they prefer for arts and culture? Why not let the people decide which institutions they want to support, and to what extent?

    As I explain in the post Government Art in Wichita: “Is this not a sterling example of an oxymoron? Must government weasel its way into every aspect of our lives?”

  • Does Kansas Economic Development Work?

    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?

  • Are airlines pilots the best judge of airline economics?

    Once in a while you read a letter in the newspaper that makes you wonder. A letter in the Wichita Eagle by Susan Priest of Wichita makes me wonder a few things.

    This letter reports on an overheard conversation among airline pilots. One source of their amusement is that there are no direct flights between Wichita and Oklahoma City.

    I’m not positive about this, but I’m sure that the demand for air travel between Wichita and Oklahoma City is very low. Google maps tells me that the driving time from one city’s downtown to the other is two hours and 30 minutes. The drive to a city’s airport, arriving way early to make sure you get through security, combined with the flight time and the drive from the other city’s airport to wherever your destination is — this would take much more time than that. And what do you do for ground transportation? Renting a car takes time, too.

    But what really makes me wonder is the pilot’s claim, and Ms. Priest’s evident agreement, that you can’t get good airfares from Wichita. Our government leaders would be distressed to hear that, as currently we spend $6.5 million per year in subsidy to a low-cost airline in order to artificially suppress all airfares. Is this subsidy not working?

    I have argued that the subsidy is not in the best interests of Wichita for several reasons. The post Remarks to Wichita City Council Regarding the AirTran Subsidy on July 11, 2006 summarizes the arguments and gives links to other supporting articles. Now, if people complain that Wichita airfares are not low, and if they’re still driving to Oklahoma City or Kansas City to catch flights — as the pilots and Ms. Priest claim — we have a serious problem.

  • Wind Power: Why Special Tax Treatment?

    A recent article in USA Today (Renewable energy firms clamor for tax breaks) reports on the uncertainty of whether the U.S. Congress will extend the tax credits that subsidize solar and wind power investment. From the article:

    Some $500 million in investment and production tax credits will expire Dec. 31 unless Congress renews them. Without that help, solar and wind power companies say they will reverse planned expansions and, in many cases, cut payrolls and capital investment.

    Commenting on this article, The Foundation for Economic Education wondered “If they need special tax treatment to survive, what does that tell you?”

    It tells me that wind and solar power are not economically viable at the moment. The only way to induce people to invest in these forms of power generation is to give them money.

    To learn more about the economics of wind and other forms of power generation, I suggest these articles: Wind Production Tax Credits Aren’t Free of Cost, Mandating Renewable Energy: It’s Not Easy Being Green, Hot Air and Wind, and Energy Independence Isn’t Very Green.