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North Carolina Expert: “Incentives” Just Protectionist Corporate Welfare

1 min readBy: Joseph Bishop-Henchman

Former North Carolina Supreme Court Justice Robert Orr, now head of the North Carolina Institute for Constitutional Law, penned this letter to the Charlotte News-Observer accurately equating government incentives to business to “protectionism of the worst kind”:

Only two groups financially benefit from the state’s current policy of giving away the public’s taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. dollars to a small number of national and international companies – economic developers and the businesses getting the handout. While teachers, mental health workers and badly needed public services are cut, those economic developers playing the incentives game – whether public sector or private – and their corporate beneficiaries dip into the public treasury to pad their own pockets.

Orr is a prophet-that-no-one-listened-to on this issue. When North Carolina officials enthusiastically opened taxpayers’ wallets to entice Dell to open a plant in the state in 2004, Orr warned that it was bad public policy and unconstitutional. The deal nonetheless went forward and officials gloated that this great new plant was there to stay. It wasn’t: it closed earlier this year and all those jobs are gone.

It’s very tempting to think that economic development can happen by granting a few companies exceptions to a state’s otherwise unattractive tax code. But it doesn’t work that way. States should be welcome mats to all business, not just those the politicians have picked as a winner.

Apparently, though, those are the only ideas the Obama team could come up with.