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Wednesday, 16 June 2010 13:58

Main Street grant doesn’t help economy, it hurts it

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By Lynda Bennett • Guest Columnist

Protestors in Waynesville recently dismissed Gov. Beverly Perdue’s stimulus grants as simply “baking up” a photo opportunity using pork barrel spending instead of addressing small business concerns. The ruling elite once stated “let them eat cake.” Now they say, “Let them eat Pork Pie.”

The governor’s Main Street Solutions Fund creates more state debt using pork instead of addressing sound economics. The governor is traveling across the state to promote her involvement, including the stop in Waynesville two weeks ago.

The TEA Party protestors offer sustainable solutions that include difficult choices for Raleigh. They assert that “stimulus” spending drains the local economy. The fund is not good for job creation. It does not address the inherent problems in North Carolina’s unattractive taxing structure. The fund creates an unfair advantage for one business at the expense of the other businesses.

For example, one business owner in Waynesville received a $300,000 grant to improve a privately-owned building that will house a brewery, a restaurant and the Haywood County Arts Council. This sounds like a good business plan. But it is not the purpose of state government to spend our tax money on risky business endeavors — at the expense of all other businesses in the region.

This is pork barrel spending, designed to make a media splash at the expense of the taxpayers. It will not help small businesses create jobs across the state.

Sen. Joe Sam Queen, D-Wayneville, and Rep. Phil Haire, D-Sylva, disagree. They voted to expand the program. They endorse even more “incentives” such as the H.E.L.P. program. Incentives take tax money from one group and give it to a special interest ... Allowing government workers to choose who they like best, instead of consumers and buyers picking the best product or business (as in a free market).

The TEA (Taxed Enough Already) movement has a better solution. Several business owners suggest the state could do a better job helping small businesses. The business owners should form an advisory council on free markets to push policies that benefit all businesses instead of a select few. Free markets create jobs, not the government.

Statistics and facts support this claim.

A major problem is the high cost of doing business in the state. The tax hike last year hurt every citizen in North Carolina. North Carolina increased it sales tax by 14 percent during a major recession. Even our local Haywood County commissioners raised property taxes as well. These decisions damage a fragile economy.

“North Carolina has long had one of the top state and local tax burdens in the Southeast and still does,” said author Joseph Coletti, a fiscal and health care policy analyst, writing for the John Locke Foundation. “Residents of the state pay twice as much in state and local taxes, adjusted for inflation, as they did in 1983.”

North Carolina has the fourteenth highest tax structure in the United States. Many say this drain on the economy is a major factor in the state’s high unemployment rate of 10 percent.

“A high tax burden could be justified if it resulted in better performance for the state in health care, education, roads, crime, and income and population growth,” Coletti added.

“But North Carolina’s higher tax burden, to my surprise, has not produced a positive return on investment for taxpayers. Every other state in the South, with the exception of Georgia, has achieved a much better grade for its taxpayers return on investment than North Carolina’s D (grade).”

North Carolina, once a leader in attracting new business, has fallen far behind surrounding states that offer a more attractive tax structure.

Instead, North Carolina offers a “progressive” approach of special “tax incentives” in which government officials choose special interests to receive favorable treatment. This does not create a level playing field. Incentives are not working.

“The combination of a higher in-state tax burden and lower burdens in the rest of the country has put North Carolina at or above the national tax-burden average with increasing frequency and weakened the state’s competitiveness within the United States and internationally,” Coletti said.

Business leaders and TEA protestors suggest that a level playing field would be more attractive to new business and existing business as well.

The level playing field is broad-based: reductions in both business and personal state income tax across the board; lower sales tax on most purchases in the state; reduce or eliminate license fees; a quick start program to fast track the permitting and inspections process for new business; stop all incentives and pork spending.

“Government has far exceeded its proper bounds, both in cost and intrusiveness. It doesn’t deliver on its legitimate promises — to protect our individual rights and ensure the delivery of core public services.

“And it can’t deliver on its illegitimate promises – to fund massive pension, health care, and education entitlements without ruinous tax increases,” states John Hood, of the JLF. (www.carolinajournal.com).

Small Business & Entrepreneurship (SBE) Council President Karen Kerrigan added: “We applaud the political leaders of states who have refrained from raising taxes on the nation’s job creators.”

“States that have kept taxes low will reap rewards as their businesses recover more quickly and shore up durability for the long term. Low-tax states will become even more competitive for investment and business relocation” (www.gcase.org).

Progressive politicians gather on Main Street to hand out money they do not have ... in exchange for photo ops.

When the state government inserts “stimulus” into the market, the effect is the exact opposite. They remove cash from the local economy, creating shortage at the local level. The “stimulus” destroys local jobs in Haywood County.

Keating from SBE added: “Quite simply, economic recovery will be restrained by high and/or increasing taxes, or boosted by low and/or falling taxes. Governors and legislators have a choice.”

In the minds of these protesters, Raleigh created the problem, and pork barrel spending is not the solution. “We the business people” have solutions that work.

The protestors want to be sure this alternate point of view is heard in Raleigh and on Main Street.

(Lynda Bennett is a businesswoman who lives in Maggie Valley.)

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