Tennessee Legislature: Hunka Hunka Tax Breaks
July 2, 2007
The legislature in Tennessee has been stuck on some terrible fiscal policies over the past few years. From the introduction of a bill to tax pornography as a means to somehow replace the tax on food to the passage of a cigarette tax hike to pay for general spending on education or even veterans’ benefits, the legislature is not always a model of good fiscal policy. And now we see that the Volunteer State has called for a special tax provision for the owner of Graceland. The short clip from USA Today:
Tennessee’s Legislature approved turning Graceland into a “Tourism Development Zone.” If the Memphis City Council approves, Graceland’s owner, CKX Inc., will get tax breaks to help build a $250 million convention hotel and visitors center at the former home of pop legend Elvis Presley.
As numerous studies have shown, these types of special tax provisions to promote regional economic growth generally do little for a region, especially compared to the alternatives for which that money could be used. Furthermore, special tax provisions for some drive up tax rates on others. A common reply to this fact is, “If the government doesn’t help, it won’t get built.” However, if the people who make this claim are wrong in that the center would be built regardless, then the government would just be wasting money and transferring it to a corporation. But even if they are correct, this shows exactly why it shouldn’t be built in the first place – the market is signaling that other investment alternatives would lead to a higher return on capital than some visitors center for Elvis. The government trying to dictate via tax policy which investments should be taken is nothing more than outright central planning.
This may sound cruel to say, but even though the King may be dead, bad tax policy in Tennessee has had many recent sightings.