Government has a long history of paying business to accomplish government goals, and business eventually repays through taxes.
In this case, keeping a major tenant in an industry specific area seems appropriate and though it opens the door to others requesting the same treatment, those will need to be dealt with as independent issues as part of the ongoing debate between business and government.
Editorial: Giving away taxes
County needs better business strategy
Published 12:00 am PDT Thursday, March 15, 2007
It's not a good sign when a struggling local government gives away some of its taxes to keep happy happy a tax-generating business that in the past has thought about leaving. But that is what Sacramento County has decided to do with an auto dealership on Fulton Avenue.
By agreeing to give back $1 million in sales tax revenues over 10 years to Mike Daughtery's Chevrolet auto dealership, the supervisors have opened the invitation to any other major sales-tax generator to ask for the same deal.
Don't blame Daughtery or any other business for looking for an economic advantage. Blame the county and the supervisors for a worrisome economic strategy. And pity the supervisors a bit, too, because their choices are limited.
Local governments salivate for sales taxes because they are distributed in a screwy way in California. Rather than being parceled out to local governments based on where people live, the taxes are distributed based on where people shop. A city with a high concentration of auto dealerships and big box stores, for example, can end up with much more sales tax money to spend than a city that concentrates on building offices and residences near transit.
Not surprisingly, California struggles to build enough housing, while the landscape is littered with retail strips. Unless the California Legislature changes the rules of how sales taxes are distributed -- which is, to put it mildly, unlikely -- local governments are stuck with this game of chasing big retailers.
